Oil prices were plummeting. Earnings were crashing. Banks were
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
"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
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
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
"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
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
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
"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
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
Between 1984 and 1989, the two banks lost $300 million, the Tulsa
"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.
If it weren't for a premature newspaper interview, the two
prominent Oklahoma banks may have been sold to a Pennsylvania
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
"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."