Episode 213

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Published on:

8th Feb 2023

Exploring Change Management, Economics and Capitalism with Curt Bradbury

This week on the podcast Matt sits down with Arkansas Business Hall of Fame Inductee Curt Bradbury, Chief Operating Officer of Stephens, Inc. Curt begins the episode by walking through the beginning of his career working with Jack Stephens and how he was given the opportunity to turn around a struggling bank at the age of 35. Based upon that experience, Curt highlights the importance of change management and he walks through how he was able to turn around a struggling Worthen Bank and lead it to to an acquisition and eventual merger into Bank of America. He then discusses the history of Stephens Inc., his background in economics and history and his views on the ethical underpinning of capitalism.

Transcript
Curt Bradbury:

What one does for a living is part of one's

Curt Bradbury:

personal fulfillment. A very smart and successful businessman

Curt Bradbury:

I knew from New Orleans once told me, you got to show up.

Matt Waller:

Excellence, professionalism, innovation and

Matt Waller:

collegiality. These are the values the Sam M. Walton College

Matt Waller:

of Business explores in education, business and the

Matt Waller:

lives of people we meet every day. I'm Matt Waller, Dean of

Matt Waller:

the Walton College and welcome to the be epic podcast. I have

Matt Waller:

with me today. Curt Bradbury, Chief Operating Officer of

Matt Waller:

Stephens Inc. He's also a director of Stephens Inc. Curt

Matt Waller:

is an alum of the Walton College he got his undergraduate degree

Matt Waller:

in finance here, and a master's in economics. But most

Matt Waller:

importantly, and congratulations Curt, on being inducted into the

Matt Waller:

Arkansas Business Hall of Fame. Curt will be at our event, our

Matt Waller:

big annual event in Little Rock in February to be inducted into

Matt Waller:

the Arkansas Business Hall of Fame, which is quite a

Matt Waller:

remarkable group of people to join. We started this in 1999

Matt Waller:

and but people that are inducted into this include people like

Matt Waller:

William Dillard, Jack Stephens, Sam Walton, Joe Ford, Don Tyson,

Matt Waller:

JB Hunt, many, many amazing leaders. And of course, fairly

Matt Waller:

recently, 2019, we had Warren Stephens inducted, and it just

Matt Waller:

occurred to me, Curt, you may be this Stephens may have more

Matt Waller:

people in the Arkansas Business Hall of Fame than any company

Matt Waller:

because Jack Stephens Warren Stephens and now you?

Curt Bradbury:

Well, that's quite an honor for our firm. If

Curt Bradbury:

that's, that's correct. And it is in any event, if

Matt Waller:

I think it is, I think that's right. And it is

Matt Waller:

it's it's a great group, and congratulations on on that

Matt Waller:

induction, and to your tremendous accomplishments in

Matt Waller:

business.

Curt Bradbury:

Thank you, Matt. You've been you've been a

Curt Bradbury:

supporter of mine for a long time now and I've been a

Curt Bradbury:

supporter of yours.

Matt Waller:

Yes.

Curt Bradbury:

Quite a while now. And it's been a pleasure to

Curt Bradbury:

work with you and, and certainly I look forward to working

Curt Bradbury:

through all the all the Arkansas Business Hall of Fame

Curt Bradbury:

preparation with you.

Matt Waller:

Well, you know, Curt, you are a man who really

Matt Waller:

notes and celebrates the accomplishments of mankind in

Matt Waller:

business. Because it's a great way to advance society, business

Matt Waller:

advances society, in so many ways. And I know in your career,

Matt Waller:

one of the, you know, you've done a number of things that

Matt Waller:

have really elevated your stature in business, but I'd

Matt Waller:

love to hear, of course, I'm familiar with the Worthen story.

Matt Waller:

We could talk about that. But you were a young man, when all

Matt Waller:

of a sudden you were plopped in the middle of Worthen Bank and

Matt Waller:

asked to lead it. Would you mind talking a little bit about that?

Curt Bradbury:

You know, the preface to all that really, is

Curt Bradbury:

that that happened, all that happened when I've been with

Curt Bradbury:

Stephens for 13 years, now, 50. And I had worked closely with

Curt Bradbury:

Jack Stephens, who was ahead of his time on many, many issues

Curt Bradbury:

with respect to investments particularly and he felt that

Curt Bradbury:

there was a at that time there was a interstate banking

Curt Bradbury:

prohibition. In other words, banks couldn't operate across

Curt Bradbury:

state lines, and he felt like that would ultimately be

Curt Bradbury:

repealed. And at that time, you know, let's say the early 70s,

Curt Bradbury:

it was that was a heresy, almost to say that bank could operate

Curt Bradbury:

across state lines. So he began taking 4.9% positions in a

Curt Bradbury:

variety of regional banks throughout the south and

Curt Bradbury:

southeast, basically. And people would ask him what his theory

Curt Bradbury:

was about owning these banks. And he would say, well, you

Curt Bradbury:

know, the McFadden Act, which restricted interstate banking

Curt Bradbury:

would have to be repealed at some point. And I don't know

Curt Bradbury:

what's going to happen, he would say, but at least when that

Curt Bradbury:

happens, our friends will know each other meaning the CEOs of

Curt Bradbury:

all these banks, and he thought that that would be a good thing.

Curt Bradbury:

So he when I haf first started here, he needed somebody to help

Curt Bradbury:

him monitor the financial data in those banks and their

Curt Bradbury:

performance and colleagues in the corporate finance

Curt Bradbury:

department, when I first came in thought that sounded a little, a

Curt Bradbury:

little bit like grunt work. And so it felt to me the newest, the

Curt Bradbury:

newest guy, and probably in 73, or 74. And so I began to work

Curt Bradbury:

with Jack on his investments in all these banks. And you know,

Curt Bradbury:

there was some really, there was some stars in that cadre of

Curt Bradbury:

banks that we, that we had investments in he will call it a

Curt Bradbury:

North Carolina National Bank now, Bank of America, and Hootie

Curt Bradbury:

Johnson at Bankers Trust of South Carolina, several of the

Curt Bradbury:

better performers in Texas, Union Planners in Memphis, great

Curt Bradbury:

bankers running a lot of these banks. So actually, at a very

Curt Bradbury:

young age, I got to know a lot of these bankers so and got to

Curt Bradbury:

watch them operate and run their bank. So when Worthen had its

Curt Bradbury:

problems, and Jack and and Stephens family owned 15% of it.

Curt Bradbury:

And it was a passive investment. And when when it had trouble. He

Curt Bradbury:

naturally in the family was naturally solicited to

Curt Bradbury:

recapitalize it because of the financial strength and their

Curt Bradbury:

prior interest in it. And basically, he said that he

Curt Bradbury:

would, but part of the deal would be that I would go to

Curt Bradbury:

Worthen as an officer, and that happened basically overnight.

Curt Bradbury:

And I was I went home and told my wife, who knew nothing about

Curt Bradbury:

what I was getting ready to do, you know, that I left Stephens

Curt Bradbury:

and gone to Worthen. And so I think people were surprised

Curt Bradbury:

about the choice. But but in fact, I had worked with Jack on

Curt Bradbury:

on banks and banking for a long time, I knew how he felt about

Curt Bradbury:

the management of the banks, I knew philosophies of his about,

Curt Bradbury:

about the banking business. And so it was sort of a natural, a

Curt Bradbury:

natural reaction for him to want me to be involved in the Worthen

Curt Bradbury:

situation.

Matt Waller:

Turning around a bank like that, or any

Matt Waller:

organization is very difficult.

Curt Bradbury:

Yeah, it is.

Matt Waller:

And how old were you at the time?

Curt Bradbury:

I was 35 the day I walked in there.

Matt Waller:

Yeah. So that's, that's a lot of responsibility

Matt Waller:

for turn turnaround at the age of 35. How did you think about

Matt Waller:

managing that turnaround, leading that turnaround?

Curt Bradbury:

Well, with all due respect to everybody

Curt Bradbury:

involved on the other side, it was clear to me that the bank

Curt Bradbury:

needed a fairly radical change in its culture and many banks at

Curt Bradbury:

that time did, for example, the cost structure of the bank was

Curt Bradbury:

way too high. And, and that, you know, that was more of a

Curt Bradbury:

cultural thing than it was a failure of operations, it was

Curt Bradbury:

just an attitude. And so one of the first things we began to do

Curt Bradbury:

was cut costs. And, of course, we had the capital issues, from

Curt Bradbury:

the huge and sort of precipitous loss of capital. And we had to

Curt Bradbury:

start about raising capital to put the balance sheet back in

Curt Bradbury:

shape and, and then we had to change the culture on lending.

Curt Bradbury:

And so I think, to me, it was, and again, as I say, all due

Curt Bradbury:

respect to the people were there at the time, I just came in with

Curt Bradbury:

a different point of view. And so the, I think, the most

Curt Bradbury:

difficult thing is to persist in that point of view, change is

Curt Bradbury:

difficult, people, people resist change. When you know, big data

Curt Bradbury:

side, they really know that they really shouldn't resist it and,

Curt Bradbury:

and, but the change is difficult to manage. And, and so, you

Curt Bradbury:

know, I was insisting on a change in the culture and it was

Curt Bradbury:

a it, I must say, to do that it takes a good bit of stubbornness

Curt Bradbury:

on on the change agents part. Because what happens is the

Curt Bradbury:

resistance says, they basically takes the form of, well, you're

Curt Bradbury:

wrong about this. And in my case, and you don't know

Curt Bradbury:

anything about banking, and the, in the, the response to that is,

Curt Bradbury:

well, I might be wrong. But we got to do this, and we're gonna

Curt Bradbury:

do this and and my wife thinks that it required stubbornness

Curt Bradbury:

that I was quite well suited to, to see all that through and and

Curt Bradbury:

apply that. But I think it just you got to lay out, you got to

Curt Bradbury:

understand there'll be resistance to change, except

Curt Bradbury:

that you've got to lay out a plan, a change in culture, and

Curt Bradbury:

then be stubborn about implementing it. And after a

Curt Bradbury:

while, you get a few cultural successes under your belt, then

Curt Bradbury:

people begin to believe and that's one of the things that

Curt Bradbury:

happened at Worthen is we had a great 10 year run really after,

Curt Bradbury:

after 85 when the problems started. But it required laying

Curt Bradbury:

out a plan stubbornly implementing the plan. And

Curt Bradbury:

convincing people that change was good.

Matt Waller:

Well, you and you were wildly successful in this

Matt Waller:

change that you implemented, and the performance. Would you mind

Matt Waller:

sharing a little bit about the results?

Curt Bradbury:

Well, we, you know, the there was tremendous

Curt Bradbury:

losses, right at right at first, and we actually turned the

Curt Bradbury:

losses around, in about it took about three or four years to

Curt Bradbury:

turn the losses around into profits. And I, you know, I was

Curt Bradbury:

not overly concerned about the fact that it was taking three or

Curt Bradbury:

four years. I know, probably, there were others, and

Curt Bradbury:

shareholders that were concerned about that. But we had, we had a

Curt Bradbury:

good bit of credit losses to absorb. And it took the earnings

Curt Bradbury:

of the cash flow of those three or four years, we're making

Curt Bradbury:

money, but but then writing the loans off, and, and net income,

Curt Bradbury:

then being zero, it took three or four years to absorb those

Curt Bradbury:

losses through the earnings that we make. But the way I, as you

Curt Bradbury:

know, I'm a capitalist and the way, the way I like to describe

Curt Bradbury:

the success is the stock had been the worthless, it was a

Curt Bradbury:

publicly traded stock on the old American Stock Exchange, the

Curt Bradbury:

stock had been in the 30s and 20s and 30s for a while. And

Curt Bradbury:

then when the problems happened, it went to four and there was a

Curt Bradbury:

recapitalisation stock offering it around four. And so so that

Curt Bradbury:

was in 85. So then in as we rebuilt, the earnings and, and

Curt Bradbury:

the expanded, actually began to make acquisitions in the, in the

Curt Bradbury:

bank, as we did that the stock went back up into the 20s. And

Curt Bradbury:

then and then, when the banking industry was in a consolidation

Curt Bradbury:

at the time, big banks were buying small banks, and we we

Curt Bradbury:

were approached by several of those banks. And the one that

Curt Bradbury:

actually won the, the flirting contest was Boatmen's Bank of

Curt Bradbury:

St. Louis, St. Louis, and that trade happened at 30, 33 or 35

Curt Bradbury:

maybe. So it was from four to 35 when that trade happened, and

Curt Bradbury:

then in two years time, the Nation's Bank, North Carolina

Curt Bradbury:

National in the nation's bank, was it become Bank of America

Curt Bradbury:

bought Boatmen's and then they paid 50 but in translating to

Curt Bradbury:

owe more than stock they paid 55 for Boatmen so that stock had

Curt Bradbury:

gone from 40 to 55. And then if you held your nation's bank Bank

Curt Bradbury:

America stock it went, it doubled from 55 so basically it

Curt Bradbury:

was a four to 100 sort of trip. If you held your your Bank of

Curt Bradbury:

America stock through to the end.

Matt Waller:

What a what a journey. That is.

Matt Waller:

Congratulations. That's amazing. Now, you've been Chief Operating

Matt Waller:

Officer of Stephens since 1995, I believe.

Curt Bradbury:

That's right.

Matt Waller:

And that's a long time. 28 years to be running.

Matt Waller:

Set. And of course, Stephens has changed so much over the years

Matt Waller:

and grown so much. But, you know, and for those listening, I

Matt Waller:

mean, I think we all know Stephens is involved in

Matt Waller:

investment banking, and wealth management, there's so many

Matt Waller:

things that Stephens does now research, sales and trading,

Matt Waller:

public finance, insurance, private capital, family office

Matt Waller:

services, and, and of course, it's a, it's a global company

Matt Waller:

now. So you've seen a lot of change over the past 28 years,

Matt Waller:

and in your position as Chief Operating Officer, I mean, it

Matt Waller:

must just be a constant, constant battle to keep up with

Matt Waller:

all of this growth and expansion.

Curt Bradbury:

Well, we have a great team. You know, the, there

Curt Bradbury:

is a tremendous organization here that that manages all those

Curt Bradbury:

different businesses. You mentioned at the outset, Jack

Curt Bradbury:

and Warren. And what and Witt Stephens, who was Jack's brother

Curt Bradbury:

said before, if I've been successful at all, it's because

Curt Bradbury:

I've stood on the shoulders of those giants that created a hell

Curt Bradbury:

of a base level company here. And of course, companies have

Curt Bradbury:

transitions and they have growth. And there was a

Curt Bradbury:

transition. When Jack Stevens joined Witt after he got out

Curt Bradbury:

after Jack got out of the Naval Academy. There was a transition

Curt Bradbury:

when Warren became CEO of the company in 1989. And, and Warren

Curt Bradbury:

has built from 1989, to continue to build the base. Things were

Curt Bradbury:

different for Jack, you know, Jack, at one approach was

Curt Bradbury:

looking at things and the company was in an in a way in

Curt Bradbury:

its infancy in and when Jack came in, and, and Jack expanded

Curt Bradbury:

it from the bond business into a lot of other things. And Warren

Curt Bradbury:

continued that expansion. And soon Warren's kids already work

Curt Bradbury:

here. And that I see that as sort of another transition. But

Curt Bradbury:

yeah, it's under Warren's leadership since 89. It's grown

Curt Bradbury:

tremendously. It's it's diverse. It has a great reputation, in

Curt Bradbury:

business everywhere, of competence and integrity. And

Curt Bradbury:

so, and it has a great organization. And so we have

Curt Bradbury:

great people working here. And it's a pleasure to work with

Curt Bradbury:

them and give them a challenge. They accepted and accomplish it.

Matt Waller:

I remember, several years ago, I'd already met you,

Matt Waller:

but it was the first time I'd heard you lecture. And so

Matt Waller:

although for those listening, I mean, we all know you're a

Matt Waller:

successful business person. But most listeners wouldn't know

Matt Waller:

that you have a scholarly side to you, necessarily. And I know

Matt Waller:

the first time we had I think it may have been it was the first

Matt Waller:

time I saw you speak to our students. I think we had were in

Matt Waller:

an auditorium that had about 300 students. And you were talking

Matt Waller:

about economics and capitalism. But I remember the thing that

Matt Waller:

struck me and I don't remember the particular authors you read,

Matt Waller:

but I believe it was Hyack and John Locke and Basquiat and some

Matt Waller:

others, and you you pulled out books, and you would read a

Matt Waller:

quote from the book or maybe your notes. And again, this is

Matt Waller:

going back several years. But you you you made a an argument,

Matt Waller:

a lecture around capitalism and economics that I thought it was

Matt Waller:

absolutely phenomenal. But most business people that I have met,

Matt Waller:

even if they're familiar with economics wouldn't have it.

Matt Waller:

experience reading some of these tremendous authors.

Curt Bradbury:

Well, of course, I started writing them. You

Matt Waller:

What a great name for economics

Matt Waller:

mentioned I have a master's degree in economics from from

Curt Bradbury:

Interesting thing about Dr. Markets. Philosophy is

Curt Bradbury:

University of Arkansas. I started reading those guys when

Curt Bradbury:

I was there. That's one of my favorite courses and getting a

Curt Bradbury:

master's degree of history was his history of economic thought,

Curt Bradbury:

he was a market oriented capitalist. And so, but any

Curt Bradbury:

thought the old Professor Don Market, who's gone now, but

Curt Bradbury:

rate, I have thought, a lot. I have thought a lot over the

Curt Bradbury:

years about the moral and ethical underpinning of

Curt Bradbury:

capitalism, which I think exists in which I think is substantial.

Curt Bradbury:

I actually worked out in my own mind and heart that that

Curt Bradbury:

premise, over the years, and I'm obviously disturbed now to see

Curt Bradbury:

capitalism, under fire for being a heartless system for being for

Curt Bradbury:

being somehow now we've got over 50% of the students or young

Curt Bradbury:

people in the country think it's a corrupt system or something

Curt Bradbury:

like that. And the fact of the matter, I think is, is that it

Curt Bradbury:

is the most moral and ethical system of economic organization

Curt Bradbury:

that that exists. Because it's based on freedom, because it's

Curt Bradbury:

based on personal freedom, and one of the myths about

Curt Bradbury:

capitalism. And, you know, Matt, we've talked about this live,

Curt Bradbury:

and I want to myths about capitalism, I feel is that the

Curt Bradbury:

myth is that it's about money, and greed and wealth. And the

Curt Bradbury:

fact is, it's not, that's not what it's about, it's about

Curt Bradbury:

human achievement, it is a system that permits and

Curt Bradbury:

encourages human achievement, with with more direct freedom to

Curt Bradbury:

accomplish that than any other system that you can, that you

Curt Bradbury:

can think of so, so when you think about the moral and

Curt Bradbury:

ethical framework, then you have to say, which system provides

Curt Bradbury:

the most autonomy for each individual, to affect his or her

Curt Bradbury:

own creativity? And yes, to be rewarded for that, and, and, you

Curt Bradbury:

know, to make money, and that all that all has a way of

Curt Bradbury:

working out, in my opinion, than coercive systems as well, like

Curt Bradbury:

socialism. There's much more coercion coercion involved, the

Curt Bradbury:

state is the boss. And my, I'm just distraught really at how,

Curt Bradbury:

what a great, tremendous misunderstanding there is, of

Curt Bradbury:

the ethical underpinnings of capitalism as we discuss it

Curt Bradbury:

today. And, and the myths that are promoted about it. In

Curt Bradbury:

arguing for the, for the, for the opposite. But, you know, one

Curt Bradbury:

of the things about capitalism that I think is it people miss

Curt Bradbury:

too is there's a referendum vote that goes on every day, in in

Curt Bradbury:

the world, in the in commerce. And that's the price system. So

Curt Bradbury:

the price system is a referendum vote of everybody in the world

Curt Bradbury:

making minut little decisions about what they want to do with

Curt Bradbury:

their own the product of their own human achievement. And that

Curt Bradbury:

referendum vote needs to be permitted. It doesn't need to

Curt Bradbury:

you don't need to be coerced into what, how you vote with,

Curt Bradbury:

with the fruits of your labor in a market system, the market

Curt Bradbury:

needs to work. And so referendum votes are the very description

Curt Bradbury:

of freedom. personal autonomy, which is maximized under a

Curt Bradbury:

capitalistic free enterprise system, is the very essence of

Curt Bradbury:

freedom. What could be more? What could be more important

Curt Bradbury:

than personal autonomy? And so I just, you know, when I listen to

Curt Bradbury:

on TV, and I hear arguments that that are thinly disguised,

Curt Bradbury:

socialistic arguments, communistic arguments. It just

Curt Bradbury:

is so disturbing to see that, you know, it's like, in my you

Curt Bradbury:

know, and I know the other side feels the other way. And I got

Curt Bradbury:

it. But but it's like, I think that this is the most moral and

Curt Bradbury:

ethical system there is. And the other side thinks it's the most

Curt Bradbury:

corrupt. And that's where we are today. But whatever the case, I

Curt Bradbury:

tell my kids is for them to work out. At my age, and, but but

Curt Bradbury:

it's, it's very disturbing, because I worked it out for

Curt Bradbury:

myself in my own heart a long time ago.

Matt Waller:

Yeah, I think you're right. A lot of people

Matt Waller:

don't think through these ideas carefully. And they kind of go

Matt Waller:

along with what sounds or feels good.

Curt Bradbury:

Yeah, yeah. And it's always, you know, one of

Curt Bradbury:

the things one of the things about what sounds or feels good

Curt Bradbury:

is that, you know, I, my brother's keeper, do the other

Curt Bradbury:

do I help the other? Well of course, of course, there's

Curt Bradbury:

nothing in the capitalistic free enterprise system that says, you

Curt Bradbury:

don't do that. I mean, Milton Friedman, you know, one of the

Curt Bradbury:

godfathers of capitalism, free markets and whatnot, said, of

Curt Bradbury:

course, there's there's there's charitable impulses in in people

Curt Bradbury:

that seek to be to achieve and be rewarded for their

Curt Bradbury:

achievements. Of course, there is and of course, there's room

Curt Bradbury:

for a safety net. Of course there is, nobody says there

Curt Bradbury:

isn't, even Friedman said that. So, I think that we, I don't

Curt Bradbury:

know, I don't know how to have that debate in a more in a

Curt Bradbury:

fairer framework than we're having it right now. Because I

Curt Bradbury:

think both sides get distorted tremendously. By the way, one of

Curt Bradbury:

the, one of the authors that you'll recall that I quoted in

Curt Bradbury:

those lectures that I gave was Emerson, Roy Emerson. And, of

Curt Bradbury:

course, he, he wrote extensively about self reliance titled A

Curt Bradbury:

visit book of his essays. And I wish I wish it were required

Curt Bradbury:

reading, I know, and it would suit me that if Karl Marx were

Curt Bradbury:

required reading, you know, I think it should be but but

Curt Bradbury:

Emerson wrote about self reliance. And, and it's one

Curt Bradbury:

step, you know, he was in the mid 1800s. And, you know, you

Curt Bradbury:

know, the, yes, people living and writing about capitalism,

Curt Bradbury:

then but it's certainly much, much more developed economic

Curt Bradbury:

system now, than was then. But he saw that what, what was

Curt Bradbury:

necessary for growth, and for widespread prosperity for each

Curt Bradbury:

person, to be self reliant, and to be autonomous unto

Curt Bradbury:

themselves. And, and he's, he's he saw that and wrote about it

Curt Bradbury:

early and it was as if he were writing about in writing about

Curt Bradbury:

self reliance, he was writing about a free market economy.

Matt Waller:

On behalf of the Sam M. Walton College of

Matt Waller:

Business, I want to thank everyone for spending time with

Matt Waller:

us for another engaging conversation. You can subscribe

Matt Waller:

by going to your favorite podcast service and searching.

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Welcome to the Be Epic Podcast featuring Brent Williams, interim dean of the Sam M. Walton College of Business at the University of Arkansas. In each episode, you will hear from guests that will inspire you to be epic. As experts in their field, they will emphasize strategy, leadership, and entrepreneurship. This programming will highlight innovation and cutting-edge information that will leave you wanting more. Be sure to connect with Brent Williams on LinkedIn to join the conversation, access show notes and discover fantastic bonus content.