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Liberty Tulsa Looks Back // Former First National Bank Celebrates 100 Years
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Liberty Tulsa Looks Back // Former First National Bank Celebrates 100 Years

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Oil prices were plummeting. Earnings were crashing. Banks were

failing.

For the shareholders of First Tulsa Bancorporation, the decisions

were few. The holding company of Tulsa's oldest bank, First

National Bank and Trust Co. of Tulsa, needed to join forces with

another Oklahoma banking leader to survive.

On Jan. 18, 1984, the cusp of the oil and real-estate bust of the

1980s, the bank's owners decided to merge with Liberty National

Corp. of Oklahoma City and weathered what officers and shareholders

call "the darkest period" of its history. First National continued

under a name, Liberty Bank and Trust Co. of Tulsa N.A., and on July

29 will celebrate its 100th year.

Through the years many words described this Tulsa institution and

its people -- tenacious, determined, loyal -- but vice president

Myra Trahern summed up Liberty Tulsa's century-long history this

way: "futuristic."

"The founders weren't willing to be stopped by obstacles," she

said. "And, even though we've had obstacles with the economy, we

kept looking to the future, to when times would be better; or if

they were good times, how to make them better."

The Early Days

More than two years before Tulsa became an incorporated city in

Indian Territory, rancher Jay Forsythe, his brother-in-law B.F.

Colley and his son-in-law C.W. Brown opened the Tulsa Banking Co.

in the heart of the business district, what is today the 100 block

south of Main Street.

"Of course in those days, far south Tulsa was Fourth Street,"

said Robert Powers, curator of the Tulsa Historical Society.

Cattle grazed the grasslands that began at the edge of early

downtown, only to be herded down Tulsa's single street for rail

shipment to markets north and east, he said.

"Tulsa was primarily a cattle town. Our reason for existence was

the large cattle ranches in Osage County and in Creek Nation ...,"

Powers said. "The bank was established to meet the needs of the

merchants who were catering to the cattle industry."

The bank opened with $10,000 of initial capital. First-day

deposits totaled $1,061.60, with $240 extended in loans.

Contrast that with the first-quarter 1995 results of Liberty

Bankcorp, the holding company of Liberty Tulsa and Liberty Bank and

Trust Co. of Oklahoma City N.A. It reported more than $2.67 billion

in total assets, nealy $2.14 billion in total deposits and a net

average of $1.15 billion in loans to commercial and individual

customers.

Before Tulsa Banking Co., money was kept hidden. History books

say what few safes there were in the town of about 650 people were

kept open, because that would be the first place any decent robber

would look.

And "Tulsey Town," as it was known to the early townsfolk, had

plenty of notorious regulars. Members of the Belle Starr Gang, the

Dalton brothers and Doolin Gang could be seen strolling Tulsa's

dusty street, Powers said. Forsythe's bank, however, never was

robbed.

"You hear people say that they didn't rob the banks in Tulsa

because they considered themselves Tulsans. And, there's the idea

that if they didn't mess with the banks in their own back yard they

would be left alone," Powers said. "But I don't know. There wasn't

a lot of money in our banks when you compared them with cities like

Coffeyville."

The bank's first obstacle was a fire in 1897. Six weeks before

Tulsa became an incorporated city, flames consumed Forsythe's

two-story, wood-framed building and half of the central business

district. The bank's safe was found, however, and business resumed

the same day. In the weeks that followed, Forsythe helped finance

the city's first fire department.

Economic Ups and Downs

In the early 1900s oil poured from wells in Red Fork and Glenn

Pool, attracting job seekers and entrepreneurs wanting to make

their fortune in black gold. Tulsa Banking Co., renamed First

National Bank in 1899, and other lenders in town took risks on

wildcat drillers and transformed the sleepy cattle town into the

oil capital of the world.

Bad times came in 1929 with the crash of the stock market and the

beginnings of the Great Depression. While many banks closed across

the country, First National, after merging with First Trust &

Savings Bank in 1928 and Tulsa National Bank in 1929, remained open

as First National Bank and Trust Co. of Tulsa.

The roller-coaster of economic times continued through World War

II, the post-war building boom, the comfortable '50s, the turbulent

'60s and climbed to a peak after the Iranian oil embargo of 1978.

Frozen oil imports, brought on by the taking of American

hostages, sent domestic oil prices in the early 1980s soaring to

$40 per barrel on the international spot market. Natural gas rose

to $10.10 per thousand cubic feet. Commercial construction projects

nearly tripled, reaching a peak value of more than $330 million.

Then, on July 5, 1982, a little-known shopping center bank in

Oklahoma City failed. Penn Square bank had been on a lending spree

since 1975, said Liberty Tulsa chairman and chief executive W.H.

Thompson Jr. The bank became overleveraged, but continued to make

loans without adequate capital.

Penn Square's failure started to domino, first knocking down

banks with direct ties, then affecting others as the state and

national economies weakened.

The Bust Hits Home

"It really didn't catch up to us until about 1984," Thompson

said. "That's when the merger took place with Liberty (Oklahoma

City)."

In late 1983, Walter Helmerich III, chairman of Helmerich and

Payne Inc. and a leading shareholder in First National, started

contacting other banks that might be interested in merging. None

accepted. Then, he received a call from J.W. McLean, chairman of

Liberty Bancorp.

"In a sense he called me but I knew I really wanted that,"

Helmerich said. "The big banks were going to have to be in both

major cities to survive. It was just a matter of who was going to

match up with who."

Helmerich took the merger offer back to the First National board

for a vote. On Jan. 18, 1984, one day after the consolidation was

approved by the Oklahoma City bank's owners, First's shareholders

voted to merge. The holding company that formed, Banks of

Mid-America, became the largest financial institution in the state.

But the downhill slide wasn't over. In 1984, five more Oklahoma

banks failed. In 1985, 13 more. In 1987, the recession struck --

attacking energy, agriculture and real estate. The downward spin

continued.

Thompson said: "At the time, none of us probably realized how

serious the economic problems were or how serious they might

become. Each year there were more banks that failed in Oklahoma --

10, 20 banks a year were failing. If we had known what was coming,

it's probable the bank would have had a hard time keeping its board

of directors."

Between 1984 and 1989, the two banks lost $300 million, the Tulsa

chairman said.

"There was a lot of uncertainty, just not knowing what the future

held for people," said Trahern, who started with the bank in 1962

as a stenographic clerk. "There was also a lot of loyalty to the

bank. You're always going to have some people who are pessimistic,

but we had a lot of people who asked, `What can we do?' and jumped

in and helped with cost-cutting or whatever they could."

"The banking business just went into the pits," Helmerich said.

"We were so desperate for cash. The bank was about to go under

because of bad loans."

A $6 million principal payment was due by Oct. 15, 1988, on a $42

million debt which stemmed from the Tulsa-Oklahoma City

consolidation. But, because of loan failures, neither the Tulsa nor

the Oklahoma City banks could give enough money to the holding

company to make the payment. Also, the holding company stopped

dividend payments to shareholders, so those had to be made up,

Thompson said. Recapitalization was needed.

A Solution

If it weren't for a premature newspaper interview, the two

prominent Oklahoma banks may have been sold to a Pennsylvania

banker.

On June 14, 1988, the board of Banks of Mid-America met with Alan

S. Fellheimer, leader of EquiManagement Inc. of Pittsburgh.

Fellheimer made a pitch to the Mid-America board; he would supply

the recapitalization needed in exchange for control of the holding

company and banks.

"He was the most egotistical, arrogant, overconfident, obnoxious

easterner I've ever seen in my life," Helmerich said. "And, we were

about to do it, until he told (an Oklahoma City) newspaper that he

was going to buy us."

Helmerich said when Oklahoma oilman John Kirkpatrick, former

chairman of Liberty Bancorp, read the article, he got so mad he

offered to put up $20 million to kick off a shareholder

recapitalization plan.

"He (Fellheimer) certainly was not an Oklahoma man," Kirkpatrick

said. "And I hated to see the bank leave Oklahoma. I think Mr.

Fellheimer was sincere in what he wanted to accomplish, and I was

sincere in what I wanted to accomplish. I just liked my plan, our

plan, better than his."

Kirkpatrick's plan, known as the "Oklahoma Plan," was to raise

$75.2 million. Added to his $20 million was $10 million from

Helmerich, $12 million from shareholder Robert Torray, $1 million

from shareholder Henry Zarrow and $1 million from shareholder

Harold Stuart. By the time the principal payment came due, the

entire amount was raised.

Keeping the ownership of Liberty Tulsa in Oklahoma was important

to Zarrow, whose first contact with the bank was in 1929 when at

the age of 13 he borrowed $300.

"This bank has been in Tulsa for nearly 100 years trying to help

the city and the state.... Even when things weren't good ... they

always supported things that were needed. It doesn't matter if it

was the arts and humanities, problems with civic matters --

whatever," said Zarrow, the president of Sooner Pipe and Supply

Corp. and a Tulsa philanthropic legend.

"Keeping the bank in Oklahoma was not only good for the state,

it was good for the morale of the customers."

As a result of the private recapitalization, Thompson said, "We

went from being a marginally capitalized banking company to being a

well-capitalized banking company."

Liberty Bancorp Inc., he said, was one of only two banks in the

Southwest to escape the crisis of the 1980s without government

intervention or a purchase by an outside company.

It makes celebrating a 100th anniversary even more of a

historically significant event, he said.

"It's not easy to get to be 100 years old," Thompson said,

"especially with all of the banking crises we've seen recently.

"Banking is only as healthy as its customers -- that was

certainly reflected in the '80s. Right now our customers are pretty

healthy and the banks are doing well. Today we are one of the

strongest, most well-capitalized banks in the Southwest and the

future looks quite bright."

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