All you need to know about Jerry Pavlas’ drive to succeed is that he earned a scholarship to play college basketball. Standing 5 feet 5 inches.
“People listened to me on the court,” the One Bank & Trust chief executive officer says of his days as a point guard at Cleveland State University, now a part of the University System of Ohio. “I think that’s where I got my leadership skills from.”
These days, he’s leading One Bank’s turnaround and community efforts in central Arkansas, his home since the fall of 2012. He is co-chairman of the Cystic Fibrosis Foundation’s ninth annual Breath of Life Gala, to be held Saturday at the Little Rock Marriott. Curtis Barnett, president and CEO of Arkansas Blue Cross and Blue Shield, is Pavlas’ co-chairman.
Pavlas’ business leadership skills were put to the test as soon as he arrived at Little Rock-based One Bank, whose previous president and CEO had just been ousted over allegations of misusing bank funds.
“When Jerry came in, it was a mess,” Little Rock banking consultant Randy Dennis says. “I don’t think anybody would have given it much chance of survival.”
By all accounts, Pavlas has stabilized One Bank and given it a new public image thanks to his and other employees’ involvement in the community.
“He does a really good job of connecting with organizations that we feel strongly about,” says Melissa Hawkins, a longtime education advocate whom Pavlas recruited to the bank board. “We’re really involved in health and education — nonprofits that make a difference.”
Pavlas, 67, grew up in inner-city Cleveland, the middle of seven children in his family. His father, a coffee salesman and World War II veteran, died when Jerry was 13. The family got by on veterans benefits and, later, his mother’s portions of her late husband’s Social Security benefits. One early work experience made an impression on him: He and a friend helped a property owner clear some old farmland every Sunday. “He lined us up, asked how much you worked, and he paid you cash. It was the honor system.”
Despite his stature, Pavlas helped lead West Tech High School to the city basketball championship, played in front of some 9,000 fans. The coach at Cleveland State — John McLendon, the first black basketball coach of a predominantly white college — had been recruiting one of Pavlas’ teammates. That summer, he offered Pavlas his last available scholarship.
Pavlas rode the bench his freshman year, then worked himself into such good condition that McLendon made him his starting guard as a sophomore. “He put me in front of two other bigger, more talented kids,” he says. “They called me ‘Big Little Man.’ You had to be really intense. I was usually the fastest guy on the court and played the best defense.”
A starter again as his junior year began, Pavlas suffered a foot injury that sidelined him for the rest of the year and kept him from passing a physical the next. He traveled with the team as a statistician, Cleveland State continued to honor his scholarship and he graduated in four years with a bachelor’s degree in accounting.
ULTIMATE CHALLENGE
Pavlas worked at a steel mill during three summers of college, making good money but realizing he’d rather wear a suit than a hard hat. “I had a lot of pimples,” he says. “It was boiling in there all the time.”
After graduation, his reputation as a basketball player helped him get his first job, at Union Commerce Bank in Cleveland. He worked in accounting and was also given the job of supervising a half-dozen longer-tenured female employees. “They ate my lunch,” he says with a laugh.
“What I had to do was bring pride back. It started with just simple things like taking out the garbage and new signs.”
Pavlas’ boss eventually asked him to start a special assets division to handle troubled loans made on real estate. “I said, ‘I don’t know anything about credit or work-outs,’ and he said, ‘I don’t know anything either. We’re going to learn together.’”
He recalls a co-worker warning him of the risks. “He said, ‘What if you don’t succeed?’ I was pretty confident. I said, ‘I will succeed.’”
He did, rising to vice president by 1983, when he moved to Dallas to take a job with Banc Texas. At that bank and Hibernia Bank of New Orleans, which acquired it, Pavlas continued his work as a turnaround specialist, helping the banks dig out from losses in the energy and real estate businesses. Pavlas raised capital in the United States and abroad to stabilize Hibernia and then put it on the road to growth. It went from $4 billion in assets to $11 billion during his tenure.
Pavlas had commuted from Dallas to New Orleans for most his five years with Hibernia. In 1988, wanting to spend more time with his daughters, he took a job as president and CEO of the much smaller First State Bank of Texas. He calls it “the first real good bank I ever worked for” — meaning one without problem assets. Pavlas helped more than double those assets before the bank’s sale in 2002.
He next worked as chairman and CEO of Presidential Financial Corp. in Atlanta, which lent money to small businesses across the country, before he took another turnaround job, with Southwest Securities, FSB of Dallas in 2008. As chief operating officer and then CEO, Pavlas helped return the bank to profitability.
In most of his jobs, Pavlas worked closely with federal banking regulators, developing a philosophy of cooperation rather than trying to outsmart them. “It’s a regulated business,” he says. “You can’t complain about it. Just work within it.”
He was sitting on a park bench in Dallas, smoking a cigar and reading The Wall Street Journal when he got a call from one of those regulators, a former top official with the federal Office of the Comptroller of the Currency. A bank in central Arkansas was in trouble, its owner accused of embezzlement by federal regulators, and the former OCC man thought the recently retired Pavlas might be the one to keep it from going under.
“It will be the smallest but the most difficult turnaround you’ve ever done in your career,” he warned.
Pavlas was in Little Rock for an interview within days of being contacted by a representative of the bank. At the time, the OCC had ordered Layton “Scooter” Stuart, its chairman and sole shareholder, to be dismissed after regulators found irregularities. The bank was undercapitalized, meaning it lacked enough equity to support operations.
Dr. James Pappas and Paul Berry, members of the bank board who’d been cleared of suspicion by the OCC, were in charge of finding another chief executive. Pappas remembers Pavlas as calm, courteous and humble. “I did not paint a rosy picture for him,” Pappas says. “I told him we were in trouble, the bank might fail.”
BRINGING PRIDE BACK
Indeed, Pavlas arrived to find employees and customers leaving the bank, auditors discovering additional irregularities, competitors licking their chops and all the bad publicity you’d expect under such circumstances.
“Nobody knew what was going on,” recalls Stacy Riley, a One Bank vice president who, like other holdovers from that era, had been blindsided by revelations of wrongdoing. “It was complete chaos.”
Pavlas didn’t know everything either — that was a big part of the challenge facing him. The federal government eventually sued Stuart’s estate for nearly $18 million, alleging that he and others had used various schemes to defraud the bank. Stuart died in March 2013, a month after federal agents searched his home. Five former bank employees were charged with crimes in the investigation.
Pavlas had only to look at the atrium windows outside his office for an example of the bank’s state of neglect. The panes had to be washed by hand twice with strong chemicals before he could actually see through them.
“What I had to do was bring pride back,” he says. “It started with just simple things like taking out the garbage and new signs.” The bank’s signs, originally red, had faded to pink.
Pavlas says he met, individually or in small groups, with all of the bank’s 80 or so employees. He fired some senior officers and brought in people from outside the bank to serve in their positions, creating what he calls a “strong team” with existing employees. He sat in on meetings between loan officers and their customers. He instituted a new banking regulations compliance program with incentives for employees.
With the help of Pappas and Berry, Pavlas brought in new outside board members with a goal of diversity. One was Bob Nash, who served under Bill Clinton in the White House and the Arkansas statehouse and is the bank’s first black board member. “I made some calls to people I knew in Washington who were involved with the FDIC and other people,” Nash says. “I asked them about Jerry. I got high marks from everybody I called — seven or eight people. They said he was a hard worker, had a lot of integrity. And he was a leader.”
In contrast to the bank’s previous leadership, Pavlas inundated board members with detailed information about bank activities. “He goes overboard to make sure they know everything that’s going on,” Nash says.
When Pavlas started, One Bank locations lacked basics like pamphlets outlining services. He got those printed and also rebranded the bank Onebanc, first with the slogan “The Power of One” and then “You Only Need One.”
Pavlas said troubled banks often adopt a bunker mentality, but he came to believe that approach wouldn’t work in central Arkansas. “I got to understand the market pretty quick here. I said, ‘Guys, we’ve got to get back out there in the community.”
He has chaired the Breath of Life Gala for three years and, with Pappas’ help, joined the board of Baptist Health Foundation.
Community involvement is now a part of bank employee performance reviews. If employees can’t find free time on the weekend, they’re allowed to take off work to volunteer for organizations such as the Ronald McDonald House. Employees are also involved with Philander Smith College, the International Greek Food Festival, Junior Deputy Baseball, the Junior League of Little Rock and a financial literacy program in the Little Rock schools.
During Pavlas’ tenure the bank settled two major litigation items — a dispute over a $20 million life insurance policy on Stuart, and a claim by Johnelle Hunt, widow of trucking tycoon J.B. Hunt. The bank has recovered additional money through litigation, loan recovery efforts and the sale of real estate assets. Pavlas said One Bank got its first “clean audit” in 2014.
“There are no surprises anymore,” he said. “It’s all behind us.”
Now the goal for Pavlas is to take the bank from being “adequately capitalized” to “well capitalized,” in OCC terms. An investment banking firm has been hired to help with the process.
“His biggest challenge is ahead, the process of recapitalizing the bank,” Dennis, the banking consultant, said. “I think this will be his crowning achievement.”
Pavlas sounds like he’s settled in for the challenge. He has bought a condominium in the River Market area. In his free time he enjoys walking, eating out, an occasional cigar and attending lots of social functions, such as the Breath of Life Gala.
“I’m here to stay,” he says. “I really love this place. I want this to be the last place I’m at.”
SELF PORTRAIT
Jerry Pavlas
DATE AND PLACE OF BIRTH: Sept. 9, 1949, Cleveland
CROSSED OFF MY BUCKET LIST: flew on the Concorde
STILL ON MY BUCKET LIST: Visit Italy and Slovakia (I’m half Italian and half Slovak)
BEST CAREER ADVICE I EVER RECEIVED: Do more than what you are asked.
I WON’T LEAVE HOME WITHOUT business cards.
FAVORITE CHILDHOOD MEMORY: playing basketball in my backyard
ONE THING I’D LIKE TO CHANGE: better inner-city and rural school systems
MY KIDS WOULD SAY I’M always there for them.
FANTASY DINNER PARTY GUESTS: my Mom and Dad, who are no longer with me
ONE WORD TO DESCRIBE ME: competitive