Citizens National Bank marks 15th year in business

by Maria Hoover

Inside Business Editor

mhoover@sbj.net

With $2.2 million in capital from about a dozen local investors, Frank Hilton and David McBeath opened Citizens National Bank on March 7, 1989 the same day a whopping 16 inches of snow blanketed the Ozarks. Hilton, who serves as Citizens National Bank's chairman and CEO, said that snow was CNB's first brush with adversity.

"A couple of us had four-wheel drives, and we brought all 11 people to work that morning," he said. "We had more people at work that day than the biggest bank in town did, and it was our first day in business."

In the early years, other adversity came in the form of regulatory issues, brought on the banking industry in large part by the savings and loan crisis of the late 1980s. However, Hilton said, the market conditions left by that crisis worked in favor of CNB.

"We opened the bank kind of on the heels of the savings and loan crisis there in the late '80s," Hilton said. "I know some of our early depositors were people who were looking to get their money out of the savings and loans because of the problems that were going on all around the country at that time."

Growth

Citizens National Bank has grown from those original 11 staff members to a total of 75 employees. The first location of the bank was in a rented 1,400-square-foot space at 520 W. University, where it stayed for nine months while the first standalone CNB location was built at 1465 E. Sunshine. There are now four CNB locations: the Sunshine location, the branch at 3212 S. Glenstone opened in 1996; the 4221 S. Campbell location opened in 1999; and the newest branch, at 2960 E. Kearney, opened in summer 2003

Land for a fifth location is under contract in Ozark near the new Wal-Mart Supercenter. Hilton expects the Ozark location to open in late 2005.

Data collected for Springfield Business Journal's listing of Springfield area banks and savings banks shows that for 2003, Citizens National Bank had assets of $214.3 million a far cry from the $2.2 million the bank started out with.

"That was the initial seed capital, and every penny after that has been acquired," Hilton said. "We lack just a little bit being 100 times bigger than we were (when we started)."

McBeath, who serves as executive vice president, said CNB's growth has been a steady progression.

The original projections for CNB were that it would have assets of slightly under $100 million at the end of 15 years, Hilton said.

"In that regard, we've more than doubled our projected asset size during that 15-year period," he said.

With each new branch comes the challenge of finding the 10 to 15 people it takes to get started.

"We have to compete on the human resource side to staff (our banks)," Hilton said. "There's only so many good bankers in any given market, and all the banks want to hire them."

Starting out

Both Hilton and McBeath were working for Boatmen's Bank prior to opening Citizens National Bank. The new venture began as an answer to what the duo saw as a shortcoming of the local banking industry.

"We kind of perceived that banking service was at an all-time low in terms of personal service at that time," Hilton said. "Since then, we realized that it got lower but at that time, we just saw the opportunity for a community bank to come in and compete with the larger regional banks that were here at that time."

McBeath said that at the time Citizens opened, a lot of people questioned whether Springfield needed another bank.

"Our answer was that it doesn't necessarily need one, but we think there's opportunity for one with the right characteristics," McBeath said.

Service

Since the first day, CNB has operated by its motto, "Banking as it should be." Hilton said personal service is a big part of that.

When people call CNB, they speak first with a live person and not an automated system, he said.

"We even shuddered when we installed voicemail three or four years ago. Although we felt our people would handle it appropriately, we wanted to make sure they did," Hilton said. Employees are instructed to make responding to voicemail a top priority, he added.

Customers also are greeted by staff members at the bank.

Challenges

Unlike many community banks, McBeath said Citizens National Bank still does its data processing in-house. Many other small banks outsource those tasks, he said.

CNB launched its consumer Internet banking option in 2001 and its Internet banking product for businesses about two years ago.

"Technology is ever-changing and that's been a huge challenge for us as a small community bank to stay close on the technology side. It's a bigger and bigger job all the time, and certainly more expensive," Hilton said.

McBeath said CNB has probably invested $150,000 in its Internet banking products.

"It will continue to be a challenge to deliver the technology the customers need and expect, and to be able to do that in a cost-effective way," he said.

Another big issue for CNB and for all banks, Hilton said is asset, or loan, quality.

"With the number of banks out here competing, there's a constant pressure to kind of lower your underwriting standards or lower your interest rates or whatever to attract new business. There's kind of a fine line there that you dare not cross over. You don't ever want to get into the position of having too many bad loans," he said.

In 2003, CNB reported $162 million in local net loans, compared to $142 million in 2002.

Standing alone, looking ahead

McBeath said most of the original investors are still involved with Citizens National Bank, which is privately held.

Hilton said there aren't any plans to take CNB to public ownership or to merge with other institutions.

"Over the years, there was interest from other banking institutions as far as buying out local banks, and I know our board met some three years ago, and we voted unanimously that we wanted to stay independent for the foreseeable future," Hilton said.

As for the new Ozark location, Hilton, who's from that city, said he's been asked "no less than 100 times over the years," about opening shop there. Another location in northwest Springfield isn't out of the question, Hilton said, and while there aren't any immediate plans to expand into other communities, "We always keep our eyes open."