Community bank files for state charter

Executives Brian Straughan, Jan Baumgartner and Kirk Bossert told Springfield Business Journal they electronically filed a charter application for Springfield First Community Bank on May 21 with the Missouri Division of Finance.

The trio earlier this year left jobs with BancorpSouth, the Tupelo, Miss.-based institution that entered Springfield last year through a $170 million merger with The Signature Bank, a community bank with roots dating back to 1997.

“We want to keep Springfield first,” said Bossert, who will serve as the bank’s chief financial officer. “We’re going to participate with local banks, use local vendors and try and keep the wealth of Springfield in Springfield.”

For months, the bankers have beat the streets to line up investors – a consortium that has raised $2.4 million in seed money to cover salaries and other startup costs estimated at $850,000. Another $20 million in escrow at Great Southern Bank will serve as initial capital for new holding company Springfield Bancshares Inc., pending regulatory approvals.

Straughan, Springfield First’s president and CEO, said organizers are winding up the holding company’s quest for capital, which is expected to top out at $22 million from 60 shareholders, according to the charter application. That’s 25 percent more capital than required by government regulators.

If the charter is approved – a process that typically takes three to four months – bank organizers plan to build the main branch at 2006 S. Glenstone Ave., where Merigold Inn now stands. A newly constructed 16,000-square-foot building would attempt to meet Leadership in Energy and Environmental Design certification standards, the executives said.

Behind the scenes

Straughan was president of BancorpSouth’s East Sunshine Street branch November 2000–February of this year, and he previously was vice president of commercial lending at Commerce Bank. Baumgartner, whose Springfield First title is executive vice president, also worked at Commerce before a seven-year stint managing BancorpSouth’s treasury division. Bossert, a certified public accountant, helped organize The Signature Bank and has 22 years of banking experience.

Former Signature Bank employees DeAnn Floyd, Amy Kiefer and Dominick “Nick” Spinelli round out the bank’s management team. Bossert, Straughan and Baumgartner serve on the proposed bank’s eight-person board. Click here for a look at the bank's management team.

None of the stockholders – a group that includes board members Charlie O’Reilly and Larry Lipscomb – would have more than 5 percent individual ownership or more than 10 percent collective ownership among related parties, according to the application.

O’Reilly, of the O’Reilly Automotive clan, said his siblings and their spouses are Springfield First stockholders, as are their combined 11 children.

“Our whole family is very excited about this new bank,” O’Reilly said. “It’s comprised of people – staff and board – who grew up in the Springfield business market and the Springfield banking market. So when we had the opportunity to be involved, it was a pretty quick 100 percent ‘yes.’”

Realtor Lipscomb is likewise enthused about the efforts behind Springfield First. He served on the board of The Bank, which merged with Signature in 2004. And when Signature was folded into BancorpSouth last year, the corporation removed local decision-making control, Lipscomb said.

“What we had going for our customers before got a little bit lost after the merger, and I think we owe it to the customers that we all had to … bring that back to them,” he said. “I just think you’ve got to know your customer, and even then, you’ve got to communicate with your customer on a regular basis.”

Attempts to reach BancorpSouth officials for comment about the formation of Springfield First were unsuccessful. President Rob Fulp was out of town, and CEO Dave Kunze did not immediately return calls.

Competitive factors

With recent mergers, Springfield First executives contend that the timing is ideal for a community bank – even in a market with 29 other banks vying for customers in the city amid tightening profit margins.

“Springfield, Missouri, has its unique competitive factors,” said Eric McClure, commissioner of the state Division of Finance, whose office is concurrently reviewing the charter application with the Federal Deposit Insurance Corp. “The net-interest margins banks can achieve now are certainly smaller than what they could achieve five or 10 years ago. … But they have to factor those in to their business plan and still show us how they can make money.”

McClure said he’d consider whether the proposed bank is likely to make a profit within three years and whether the Springfield market can accommodate another player.

The Signature Bank’s viability also was questioned when its organizers announced their plans more than a decade ago, Bossert said, yet it quickly emerged as one of the fastest-growing banks in the nation, reaching $850 million in assets in 10 years.

“Just because you have a lot of banks doesn’t make (a market) over-banked,” Bossert said. “You have to have a good business model with a sound management team.”

Baumgartner said the proposed bank’s emphasis on customer relations would be paramount to its success. Springfield First plans to offer real-time Internet-based banking services as well as consumer and business loans. Organizers said they would employ a fiscally responsible approach to managing asset liability and would avoid speculative lending and brokered CDs.

“Our customers say that they want to do business with a locally owned community bank,” she said. “They like the personal attention. They like us understanding their needs … and being able to take care of them.”

OakStar Bank President and CEO Jim Bracht said the Springfield First business model sounds similar to that of all community banks.

“I don’t see anything different in what their mission is compared to the other community banks in the market,” he said. “Banking in the community bank area has the same basic types of products.”

Springfield First’s backers have taken the necessary steps to ensure that the bank remains local. Their goal is to grow the bank’s assets to $200 million in three years and keep it at that size. To that end, they’ve established the bank as an S corporation.

“If we were going to grow it and sell it, we’d need more capital,” Bossert said. “We wouldn’t be able pay the dividends and pay the taxes. So that model clearly says this is a community bank to stay. It’s not going to be sold to an out-of-state (bank).”

Debbie Hardman, the state’s senior bank examiner in charge of applications, said state regulators later this year would conduct a brief on-site review of Springfield First. At that time, Springfield First organizers hope to be up and running with a temporary office in a doublewide trailer at the future bank site, which is under contract to be purchased for $2 million, according to the application.