The God Honest Truth about the Efficiency Ratio
This isn't complicated, folks.
I had lunch on Sunday with Tip Burch, the president and CEO of Security State Bank of Oklahoma.
Security State is a $360 million bank based in Wewoka, Oklahoma.
The population of Wewoka peaked at 10,600 residents in the 1930s and has been on a steady decline ever since. Three thousand people live there today.
If a bank’s fortunes are tied to the fortunes of its local economy, as we’re told, then Security State must be having a rough go at it.
No bank could thrive in that environment.
Right?!?
And yet…
Security State earns more than 2 percent on its assets, is stacking cash at the holding company level, and runs with a 42 percent efficiency ratio.
What gives?
Explaining Security State’s success is easy. Any bank could use the same playbook.
But as you’ll see, few are likely to do so.
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