University of Arkansas

Walton College

The Sam M. Walton College of Business

Episode 77: Reynie Rutledge Discusses the Challenges Faced in Banking and Owning an Expanding Community Bank

June 24, 2020  |  By Matt Waller

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Reynie Rutledge is the President and CEO of First Security Bancorp, a bank that began in Searcy, AR, and now has locations throughout the state. Reynie is a recent inductee into the Arkansas Business Hall of fame. After graduating with a degree in industrial engineering, he returned to get an MBA from the Walton College of Business.

Episode Transcript


00:07 Matt Waller: Hi, I'm Matt Waller, dean of the Sam M. Walton College of Business, welcome to Be EPIC, the podcast where we explore excellence, professionalism, innovation and collegiality and what those values mean in business, education, and your life today. Today I have with me Reynie Rutledge, president and CEO of First Security Bancorp and a two-time alum of the University of Arkansas. He has an undergraduate degree in Industrial Engineering and an MBA from the Walton College, and he is on my advisory board, my Executive Advisory Board. And he is being inducted into the 2020 cohort of the Arkansas Business Hall of Fame, which is a big deal because we only admit four people per year. And we've been doing it since 1999 and we always have a large number of people who are nominated. So Reynie, we're really proud of what you've accomplished, thanks for taking time to visit with me today.

01:18 Reynie Rutledge: Thank you for the invite.

01:20 Matt Waller: So Reynie, you've been involved in banking for a long time, and during that time the banking industry has gone through lots of ups and downs. There's been a lot of challenges in the banking industry over the, and being the top leader in an organization like a bank during those tough times, not just tough for banking but tough for the economy like the Great Recession or 9/11, savings and loan crisis etcetera, etcetera, you've seen all of these things and been a leader through them. And so as you know the values of the Walton College include excellence, professionalism, innovation and collegiality, in good times it's easy to some degree to live up to those values, but in the tough times it can be very challenging. What are some of the toughest times for the economy you've led through?

02:18 Reynie Rutledge: That's a really good question. Well, I have an answer, but there are several like you mentioned, I have been in the business a long time. When we bought First Security Bank in 1977 it was $46 million, and at that time you had Reg Q which set interest rates, no checking accounts had interest rates, you had a savings account and then basically you had a four-year CD within... And then if you had over $100,000, which in 1977 was a whole lot more money than it is today, then you could negotiate that rate. And when we bought the bank in '77 we had four or five $100,000 CDs, so in essence our whole deposit base was pretty much fixed and set by the government, not something we had to worry about. Within six months of our acquisition, the rules changed and they let banks have what they called a Treasury Bill CD, and it was priced weekly off of the six-month T-bill that they auctioned, that the government had, plus 25 basis points. And the minimum dollar size for that CD was $10,000. Well again, we had four or five of these $100,000s CDs, but people came out of the woodworks, putting different accounts together and all to come up with $10,000. It literally changed our whole pricing structure overnight six months after the acquisition, where we had 100% debt that we had to pay back on the bank. So that was my first experience of "Oh my, how are we gonna handle this, and what's it gonna do to us?"

04:21 Matt Waller: And what's challenging about that is how do you handle it, then how do you communicate it too because I'm sure people in your organization were concerned about it as well.

04:31 Reynie Rutledge: True, the organization at that time was three branches in White County and about probably 35 people, so a little easier to communicate with then than it is now.

04:42 Matt Waller: Well, yeah, and now you've got, what, a thousand employees?

04:45 Reynie Rutledge: We've got around 1,000 employees.

04:47 Matt Waller: And...

04:47 Reynie Rutledge: 78 branches I think, something like that.

04:50 Matt Waller: And things have grown a lot since then.

04:55 Reynie Rutledge: It's been interesting, it sure has.

04:56 Matt Waller: I wanna explore that with you, but before I do let's go back to that story.

05:01 Reynie Rutledge: Well, that was the first within six months, it's like, "Oh my, the world just changed." It really did from a banking perspective, and again, that was in '77. Well, in the '80,'81 era, we had pretty much hyper-inflation and interest rates went up into 18, 19, 20%. In Arkansas, I had a user law that capped rates that you could loan to people at 10%.

05:32 Matt Waller: So loans weren't being made?

05:36 Reynie Rutledge: Well, we were able to go to the federal government, and they passed a temporary bill that would allow Arkansas banks to loan at 5% over the discount rate. So that gave us some relief during that time period, but it wasn't permanent. So anyway we've had... That was different, there was another challenge and that was in the early '80s when that was a challenge across the country for both businesses and banks because businesses normally could not make an acquisition, real estate couldn't make a deal work at 20%. Things just don't work at that kind of rates, so it was a problem really for everybody. But that was in the early '80s. That gets back in order, and then like you say, you have different other crises that have come up but...

06:32 Matt Waller: But when those things happen one after another after buying the bank, did you ever wonder if you should have bought the bank in those early days?

06:41 Reynie Rutledge: I would say I didn't. It's kind of like you're in the trap, you could worry about why did I do that. But really, you need to just focus all your time on how am I gonna make it through this opportunity to get to the other side.

06:56 Matt Waller: So how did you communicate with your staff and management team about this?

07:02 Reynie Rutledge: Back then, it was just verbally. I'd see them probably every day. There was no email, there were no cell phones, there was no text messaging, so it was just verbally communicate. And we were able to do that for quite a while before we had multiple branches in multiple counties around the state. And when we did get to that type of situation, normally on a weekly basis, I would be going to those markets. Those markets had good upward communication with me.

07:36 Matt Waller: Where do you see the banking industry going over the next 10 to 20 years?

07:42 Reynie Rutledge: I would say first, and this is amazing to me, but we just finished a decade, just starting a new decade. And you couldn't help but look back and say, "Where were we and how was this last decade?" Just a great quick look before you move forward. This decade started, it wasn't in the middle of the Great Recession, but it was 2010, it was just right there. I know, I remember being the most scared I've been about the future of our financial industry was in the fall of '08. And in '09, things started lightening up just a little bit in the spring, but I know I had a regulator call that was getting ready to come for an exam, and he wanted to make sure I had this and I had that. And have you got your five-year plan? I said, "Bill, I've got my five-year plan, but I could care less. I'm telling you. My goal is to make it to the end of this year, which is 2009. That's all I'm thinking about. How are we gonna make it to the end of this year?"

08:52 Reynie Rutledge: So 2010, the start of this last decade was pretty close right after that. And looking back just the other day, this past decade has probably been the best time that we've had from our institution standpoint. I do not see the next 10 years being as positive for us as the last 10 years. So we're seeing competition is just rampant. It is amazing how tough things are, and how much competition there is, and how hard we're having to work for everything we get. From a competitive standpoint, we're getting more back to a situation like it was at '06 and '07 before the Great Recession.

09:45 Matt Waller: Reynie, as you know, one of our values, one of our four values is professionalism. And the way we define that includes the concept of integrity. And we have a huge initiative around this in the Walton College right now. We're calling it the Business Integrity Leadership Initiative. And part of the reason that we're doing this is, a lot of business schools have ethics courses, we have one. Not everyone has to take it. We're trying to figure out how do you give practical integrity ethics tools to students or ways of thinking frameworks that can help them when they're out in the world as managers and leaders. But when you think of business integrity as a leader, how do you look at it?

10:36 Reynie Rutledge: Probably, very simply. Number one, I'm really glad to hear that you all are emphasizing that because for any young people coming out in business, for anybody in business, I don't think there's anything more important than ethics and integrity. And from my perspective, it's something that has to be earned over a long period of time by living it really. You can't just say, "Well, I have good ethics" or "My integrity is great," you can't just say that because it's too easy to say, but to live it is much more difficult. Although to me, it's really not... Shouldn't be difficult. You just do the right thing. And I would hope, but I know it's not the case, that all of your students in the back of their mind know what's the right thing. And if they are dealing with an individual, and the way they're dealing with them is not the way they would want to be dealt with, then it's probably not the right thing.

12:08 Matt Waller: We've had students over the years who've worked for unethical organizations or had bosses that weren't and...

12:15 Reynie Rutledge: Were ethical?

12:16 Matt Waller: Were not.

12:16 Reynie Rutledge: Were not ethical.

12:17 Matt Waller: It's not very common, but it happens. Sometimes, especially young people will be asked to do something that is unethical. And they sometimes think, "Well, my boss is asking me to do it." They don't have a lot to go on.

12:31 Reynie Rutledge: Yeah.

12:31 Matt Waller: They think, "Well, maybe that's okay." You probably heard of things like this.

12:35 Reynie Rutledge: I could see where that could happen. And if you're asked to do something that you don't believe is correct, and you know it's not the correct thing, probably shouldn't do it.

12:46 Matt Waller: Yeah.

12:46 Reynie Rutledge: And if it causes a problem, it's good for you to know early so you can find another job.

12:52 Matt Waller: Yeah, exactly.

12:54 Reynie Rutledge: And talking about how you've got more or less to earn that integrity title or association with your name. And that takes a long time. You can lose that title or the thought that you have integrity in one instance, and so that's something that we should always be cognizant of. If you want to be considered as an ethical person with high integrity, then everything you do must reflect that.

13:29 Matt Waller: Reynie, you've emphasized the importance of being a community bank, and First Security is within Arkansas. But Arkansas's grown a lot and the wealth in Arkansas's grown a lot. And the size of First Security's grown a lot. How do you keep that community bank feel now that you're a $6 billion bank?

13:55 Reynie Rutledge: Obviously we can only be one truly hometown bank and that's in Searcy where I live and where we started, but the people that we have in Little Rock, Conway, Hot Springs, Mountain Home, Northwest Arkansas, they all live in those communities. They are interested in the success of those communities, and when I go visit their markets on a frequent basis, we talk about what's going on in their communities, and to me they know, and I'll tell them whenever the opportunity arises, they know that my goal and our bank's goal, no matter how large we get, is to be a community-oriented bank in the markets we serve. It's the people we've hired, and those people love living in and working in the communities where they raise their families. And we just emphasize and we give them the authority to be able to provide a community bank where they're located. As you know from traveling around the state of Arkansas, there's no better people, either to be customers or to work for you, and there's nothing better than to try to make the community that you live in a better place to live.

15:33 Matt Waller: Well Reynie, again we are proud of you and we're so thrilled that you're going to be inducted into the Arkansas Business Hall of Fame. Congratulations.

15:44 Reynie Rutledge: Thank you, Matt. It truly is an honor, and given the fact that I was on the board when Noel Williams had the idea of putting this thing together truly does make it special from my perspective.


16:00 Matt Waller: Thanks for listening to today's episode of the Be EPIC Podcast from the Walton College. You can find us on Google, SoundCloud, iTunes, or look for us wherever you find your podcasts. Be sure to subscribe and rate us. You can find current and past episodes by searching BeEpicPodcast, one word. That's B-E E-P-I-C Podcast. And now be epic.


Matt WallerMatthew A. Waller is the dean of the Sam M. Walton College of Business, Sam M. Walton Leadership Chair and professor of supply chain management. He is also the host for the Be EPIC Podcast for Walton College.


Walton College's EPIC values -- Excellence, Professionalism, Innovation and Collegiality -- are the heart of Dean Waller’s podcast. Since the beginning of the series, Waller has interviewed business professionals, industry experts, CEOs and Walton College students to bring listeners first-hand accounts directly from the entrepreneurial world.


Waller is an SEC Academic Leadership Fellow and coauthor of “The Definitive Guide to Inventory Management: Principles and Strategies for the Efficient Flow of Inventory across the Supply Chain,” published by Pearson Education. He is the former co-editor-in-chief of Journal of Business Logistics. His opinion pieces have appeared in Wall Street Journal Asia and Financial Times.


Waller received an M.S. and Ph.D. from Pennsylvania State University and a B.S.B.A., summa cum laude, from the University of Missouri.

Walton College

Walton College of Business

Since its founding at the University of Arkansas in 1926, the Sam M. Walton College of Business has grown to become the state's premier college of business – as well as a nationally competitive business school. Learn more...

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We're sitting down with innovators and business mavericks to discuss strategy, leadership and entrepreneurship. The Be EPIC Podcast is hosted by Matthew Waller, dean of the Sam M. Walton College of Business at the University of Arkansas. Learn more...

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