Missouri Trust & Investment Co. is raising additional capital from shareholders as officials look to make an acquisition and cover net income losses, among other financial moves.
Missouri Trust CEO Richard Russell said the capital, an undisclosed amount, also would help the firm meet the $2 million minimum capital requirement by the Missouri Division of Finance.
Missouri Trust currently has $1.52 million in capital, according to the firm’s latest call report on file with the state.
Russell said Missouri Trust’s acquisition target is in Missouri but outside of the Springfield market.
Declining to name the company, Russell said negotiations are in the final stages and he hopes to close the deal in the second quarter.
“It’s a brand new market, offering a synergy of services between the two markets,” he said.
Missouri Trust currently manages $118 million in assets from 210 accounts, Russell said, roughly double 2017 figures.
“This is a fairly regular event for growing organizations to have capital raises,” Russell said. “The capital is required to continue our growth and for the acquisition.”
Lee Keith, commissioner of finance for the Missouri Division of Finance, said trust companies raise capital for multiple reasons, such as a change in business model or an acquisition. Keith said he was not aware of Missouri Trust’s plans to raise more capital.
The call report filed with the state on Dec. 31, 2018, shows a net loss of $808,000. It also reported $1.65 million in assets and $1.65 million in total liabilities and equity capital.
“We anticipate a little time to break even,” Russell said. “The minimum capital requirement was doubled shortly after we got our charter. Projections got thrown out.”
The minimum capital requirement doubled to $2 million after the Division of Finance began looking into the requirements over a year ago, Keith said.
“That’s a fairly significant change when we opened,” Russell said.
He said the Missouri Division of Finance has been accommodating while the company climbs toward the $2 million mark.
“They’ve given us time to transition to that number. They want to see us succeed,” Russell said.
“That’s a target we have in the near future to get to that number.”
State officials say the increase reflects the time value of money.
“A lot of the trust company guidelines were established 30 or 40 years ago,” Keith said. “If you take inflation on $250,000 over 35 to 40 years, it’s going to be higher than $2 million, but that’s a good round number.”
Keith said the Division of Finance works with trust companies below the minimum capital requirement to establish a timeline.
“The decision is a joint decision by other both parties,” he said.
Russell declined to disclose Missouri Trust’s timeline.
The company has 48 shareholders listed on its website, including a nine-member board of directors.
Springfield Business Journal’s calls to five shareholders were not returned by press time.
Missouri Trust is a state-chartered independent trust company currently serving the northwest Arkansas and south and central Missouri markets with one office at 3100 S. National Ave. It received its charter 20 months ago.
According to past SBJ reporting, Missouri Trust raised $3 million during its planning stage before opening.
Missouri Trust works with startup companies and family businesses, established organizations and executives from large companies by providing trust and estate administration, investment management, 401(k) and individual retirement account management, and financial and estate planning, according to Missouri Trust’s website.
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