Market Shake-Up: New institutions continue to enter Springfield-area banking

The current banking market would be unrecognizable to someone returning to the area after many years.

The old guard of the early 1990s – names such as Boatmen’s, Roosevelt, Mercantile and Union Planters – are gone, replaced with local names such as The Signature Bank, Liberty Bank and Mid-Missouri Bank as well as national mega-banks such as Bank of America and U.S. Bank.

In November, The Signature Bank announced a merger with Mississippi-based BancorpSouth and will eventually operate under the BancorpSouth name, though plans are for local employees to remain in place. The Signature Bank officials did not return calls seeking comment for this story, but have said that the name change is expected later this year.

Other banks, meanwhile, are playing up the fact that they don’t plan to merge in the future.

The alternative

Deciding to merge – or not – comes down to responsibility to shareholders, according to OakStar Bank President and CEO James Bracht.

“From the standpoint of building a bank to sell, I don’t. I build a bank to take care of my clients,” he said. “If at some point in the future, someone comes in and makes a business proposition that’s really great, I’d have to look at that for the sake of the shareholders.”

Bracht said he thinks Springfield can handle the large number of banks here because of business growth, and while he doesn’t think future mergers will affect his bank, he will be watching the market for growth opportunities of a different sort.

“If the opportunity presents itself, by another bank’s merger not being good for the client or not being customer-friendly or consumer-oriented, as a competitor I’ll take advantage of that and get involved,” he said. “But from a strategic planning aspect, I don’t see mergers as something I’m going to plan around.”

Springfield-based Citizens National Bank also isn’t interested in merging, as is made clear by its ongoing marketing campaign, “Merge? No thanks, not us.”

“We have the technological capabilities of the bigger banks that this market demands, but it’s been our experience that the last thing people want is to get an automated voice and a menu with seven options that don’t apply to their need at the moment,” said Citizens National Bank Chairman and CEO Frank Hilton. “We’ve been successful … for 18 years – it’s worked and we continue to add new customers every day.”

Catalyst for change

Commerce Bank Regional President Bob Hammerschmidt says the merger trend was expected; the Midwest is now catching up with a trend that has been occurring for more than a decade on both coasts.

“Here in the middle part of the country, we went relatively unmerged – the larger banks were really focusing on the top 50 markets,” he said. “This propagated a lot of unrest locally – a lot of good bankers took their constituencies and formed their own banks. “

But now, Hammershmidt says, “the big banks have gotten their act together,” and are now looking to enter markets such as Springfield via acquisitions or mergers, possibly with some of the smaller banks that were started in the last 10 years.

As it stands now, Hammerschmidt says the region is “overbanked” – too many banks have staked a claim in the region, leading to increased competition and shrinking net interest margins. Continued mergers could cut the number of institutions in the market.

The Springfield market has fewer people per bank office than the markets in St. Louis, Kansas City and Oklahoma City, and a similar number to Fayetteville, Ark. – an area Hammerschmidt says is also overcrowded with banking options.

The number of financial institutions isn’t stopping banks – including Commerce – from expanding via merger. Commerce has announced three mergers within the last year: Boone National Savings in Columbia, West Pointe Bancorp in southern Illinois and South Tulsa Financial Corp. in Tulsa.

BancorpSouth isn’t the only institution to throw its hat into the ring: The Bank of Missouri opened in Springfield in September, Southwest Community Bank and First Home Savings Bank both moved into Springfield in July, and OakStar Bank celebrated its one-year anniversary in November, followed by a groundbreaking for its first branch last month. Another addition to the local financial institution scene is Michigan-based Crestmark Bank. The bank, represented in Springfield by Vice President of Business Development Donna Mullane, doesn’t currently have a physical location; Mullane works out of her home. The bank specializes in lending to businesses that don’t qualify for funding from traditional banks.

The market, however, isn’t changing only from new banks coming to town. As a result of an August merger, three holding companies – Mid-Missouri Bancshares Inc., Central State Bancshares Inc. and First Financial Bancshares Inc. – are now operating under Mid-Missouri Bancshares with the name Mid-Missouri Bank. The merger affected two Webb City Bank branches, three Bank of Joplin branches, seven Mid-Missouri Bank branches and three First National Bank of Mount Vernon branches.[[In-content Ad]]