WE GO BEYOND THE HEADLINES
Each week, Sunday Business Editor Henry Unger has a candid conversation with a local leader as part of our commitment to bring you insightful coverage of metro Atlanta’s business scene.
Joe Evans thinks he can turn failure into success.
Evans, CEO of Atlanta-based State Bank Financial, engineered the purchase of a dozen failed Georgia banks from the Federal Deposit Insurance Corp., betting he can replace them with thriving State Bank & Trust branches in metro Atlanta and middle Georgia.
Evans, 63, has spent most of his career as a community banker. He helped build and then sell two Georgia banks for a significant premium — Century South Banks to BB&T and Flag Financial to RBC.
But his current task — disposing of problem loans from 12 different banks and knitting together a successful replacement — will not be easy. Evans, who grew up on a farm in middle Georgia and graduated from Georgia Tech, will be drawing on some interesting personal and professional experiences as he tries to build State Bank, which currently has $2.6 billion in assets.
Q: What early experience helped shaped who you are today?
A: I grew up in Smarr (about 20 miles from Macon) on a dairy farm. It has been in the family since 1821, with one brief exception. During the Depression era, it got foreclosed on. But my grandfather eventually was able to buy it back from the bank.
My earliest memories are that we milked about 50 cows. But my dad had a dream that I would not be chained to the farm. He made it an absolute priority that my schoolwork came first and my farmwork came second.
Dad came to love farming, but I think he felt he did not have the options to do other things. He did not want that repeated. He firmly pushed me out of the nest. He decided I was going to go to Georgia Tech.
Schoolwork came easy for me. My mother is a lifelong learner. She was a teacher and a librarian. I bet to this day she reads three books a week, and she’s 88 years old.
Q: You learned an important business lesson on the farm. What was it?
A: My dad built the dairy from 50 cows to 400 cows. But I remember him concluding that he was taking more money to the bottom line — with less work — at 200 cows than at 400 cows. So he scaled the dairy back.
The lesson is it’s not the top line that matters, but the bottom line.
Something I’ve observed throughout my banking career is that there are breakpoints. Beyond a certain point, you’ll need a different, perhaps more complex management structure to effectively deal with the larger size. If you cross that threshold, you better be prepared to not just grow incrementally, but to grow far enough to make the more complex structure make sense.
The other thing I learned was that my dad had a great objectivity — an ability to second-guess himself. He concluded that the decision to take the farm from 200 cows to 400 didn’t make as much sense as he thought it would. He had the presence of mind to change it.
There’s a saying that we had on the farm: “You don’t name your cows.” That means you don’t get too emotionally attached to a business decision.
Q: You learned an important lesson from your very successful football coach, Dan Pitts at Mary Persons High School in Forsyth. What was it?
A: Coach Pitts had a tremendous impact on me. A poem was stuck on the locker room wall: "If you think you'll lose, you're lost. For in life's games, the victor is not always the stronger or faster man. Sooner or later, the one who wins is one who thinks he can."
I learned that with commitment, preparation, teamwork and not caring who gets the credit, you can overcome a lot of limitations. You can construct highly functional teams with less than perfect players.
Do a few things well. Coach Pitts taught me to effectively block players much larger than me through positioning and leverage. He taught all of us how to play to our strengths.
I tried to replicate the feeling I had with that team in the businesses that I’ve run.
Q: You’ve been able to build and sell two community banks at a premium, and you’re now constructing a third financial institution. What did you learn?
A: With respect to the sale of the two previous banks, if you're a public company, you have to earn your independence. You have to objectively evaluate your prospects for creating shareholder value as an independent company, as compared to whatever alternatives may be at hand.
As a steward of other people’s money, when the economic value of the enterprise to another owner is greater than you can replicate organically, that’s a point in time you have to look yourself in the mirror and be honest. Fiduciary responsibilities trump personal preferences.
As for State Bank, we have two strategies. One is to service and liquidate the problem assets. Then you have a clean bank, unencumbered by problem loans, and you start to focus on doing quality business.
We have been able to consolidate branches and save money by shifting from physical to electronic distribution.
We also have been able to significantly change the deposit makeup of the banks we acquired from being predominantly funded by certificates of deposit that have higher rates and higher handling costs, to being predominantly funded by checking accounts, savings accounts and money market accounts that have lower costs. Also, they are much stickier. When customers have their primary payments account with a bank, that’s what we consider a long-term relationship. Our long-term success is going to be primarily driven by the quality of our deposit base and having very deep relationships with our primary depositors.
Q: What’s your best overall advice?
A: Management matters. There's nothing more critical to any enterprise than the quality and competency of the leadership.
A CEO in any business has two fundamental things to do — getting the right team in place and setting the right direction. Failure to do either of those presents an obstacle you can’t manage around.
For younger people, find a company that’s doing something interesting, led by people you like and respect. When you find one, don’t worry about what job you get. Take a job sweeping the floor there. You can change seats on the bus later. But first, get on a bus going in the right direction, populated by people who you can learn from.
Also, in job interviews, I typically ask people to share with me something that they really botched. It’s not what people tell me, but the ease with which people tell me that makes an impression on me. You want self-reflection, but you don’t want someone to say it with a cavalier attitude. I look for somebody who can comfortably learn from their experiences and grow from them.
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