Another bank applies to join Springfield market

by Paul Flemming

SBJ Staff

Get out your score card and

add another name to the lineup of banks in the Springfield market.

Jamie Holstein and Mark A. Harrington are finalizing an application for an as-yet-unnamed nationally chartered bank.

When that charter application is submitted to the Office of the Comptroller of the Currency, it will present a proposed bank with $6 million in initial capitalization from a group of about 40 investors, the two said. None of the capitalization is being borrowed.

The application is expected to be submitted within the next four weeks.

"Raising the dollars is not the problem. Raising the dollars from the right kind of people is the challenge," Holstein said, noting they are not soliciting investors. "It's humbling when investors say they want to do it and do it with Mark and Jamie."

The proposed bank is planned for an opening in the first half of 1999. Holstein will serve as the bank's president, chairman and chief executive officer. Harrington will be executive vice president and chief lending officer. A board of up to 12 members, including Harrington and Holstein, will oversee the bank.

The charter application is being written with the aid of UMB Consulting Inc., a subsidiary of the Kansas City-based holding company. Holstein said a federal charter is being sought mainly because of his and Harrington's familiarity with those regulators.

Property and a building on West Sunshine are under contract, with the sale due to close within the month, Holstein said. A chief operations officer is committed to join the bank, but could not be named because of current employment. Holstein resigned from Citizens National Bank to pursue other business interests Aug. 24, with Harrington following suit Sept. 11.

"We will have no more than 10 (employees) to start, from janitor to CEO," Holstein said. The pair will establish temporary offices in the next few weeks.

In a market that other bankers have characterized as overbanked, and after three other startup banks began business in 1997, Holstein and Harrington have mustered "the guts to take the step and do it," Holstein said.

The previous startups "got in at a wonderful time, maybe a more opportune time. But there is absolutely no way you can take 70 years of experience (of the three senior officers) and customer base that we have and not get our fair share of the business that's out there," he added.

"It's all about ownership," Harrington said. "It's a capitalistic society, and capital is rewarded. I told Frank he was the inspiration."

Frank Hilton, president and CEO of Citizens National Bank, with David McBeath started Citizens National in 1989.

"Ten years ago when we chartered a new bank, we had the field to ourselves (as a new bank) for four or five years," Hilton said. "I stand back and try to look at it objectively, and I have to question the timing on the thing. But I don't ever want to pour cold water on the entrepreneurial spirit. We certainly don't wish these guys any ill."

While noting there were also naysayers among competing banking executives when Citizens National began, Hilton said conditions in the overall national economy, as well in southwest Missouri and its banking market, pose challenges to starting a new bank now.

He said the number of lenders in town, and the concomitant pressure on rates and margins, along with trembles in the equity and agriculture markets, are particularly of note. In addition, he said, bank competition also comes into play in the cost of employees as rival banks jockey for talent, as well as customers.

Nonetheless, "those that can manage themselves and capitalize themselves, those will be the ones that continue and sustain success. Springfield's a good market to be in," Hilton said.

"I think there's room" for more banks, said Jim Street, president and CEO of Village Bank, one of the banks to begin business in 1997. "I'm still of the opinion if you work hard and are dedicated, you'll do well. He's coming from a very successful bank ... he knows how it's done."

"It seems to be unique here in Springfield. The rest of the state is seeing very few de novo banks. We've seen with the startups very aggressive pricing on deposits. It's very competitive, and that makes it a little tough for startups," said Bob Ward, president and CEO of Metropolitan National Bank. "There is just so much business out there, and some of this is just moving (business) around. You have to concentrate internally and take care of yourself."

Holstein said his new bank's strategy to take care of itself relies on its first location, his and Harrington's areas of specialty, personal relationships and sound management decisions.

"We're going into an area of Springfield that we think is under-served by community banks," Holstein said of the West Sunshine location that has previously housed a bank. "We're not sure why that area has been ignored."

Harrington has worked extensively in the area of agricultural lending.

"Farmers are as resistant to change as most people," Harrington said, explaining his hopes that former ag customers may seek to continue a professional relationship regardless of bank affiliation.

"People don't bank at banks, they bank with bankers," Holstein said.

Holstein mentioned his background with local professionals, and both point to U.S. Small Business Administration loans as an area of concentration.

In addition, Holstein said, the continued possibility of large holding-company bank mergers offers the opportunity for community banks of more disruption in the local banking market.

Harrington has been a banker for more than 14 years, working at Great Southern, Farm & Home, Mercantile and Citizens National for the last seven. Holstein, a Springfield native, has worked for 28 years in banking at Southern Missouri Trust Company, First National in Lebanon, Empire Bank, Boatmen's Bank and Citizens National for the last six years.[[In-content Ad]]