Old Missouri Bank hits 10-year mark

At a time when many financial institutions are struggling with the results of their own excesses - from aggressive risk-taking to exotic mortgage lending - Springfield-based Old Missouri Bank is celebrating the results of 10 years of considered, conservative movement.

Old Missouri, which specializes in agricultural lending, opened in 1999 with $4.6 million in capital, now boasts $110 million in assets. Started by Mark Harrington, Jamie Holstein and a group of local investors, Old Missouri is the subsidiary of Jamesmark Bancshares Inc. Formed in 1998, Jamesmark is a one-bank holding company comprising 37 southwest Missouri investors.

"We've grown a lot," said President and CEO Mark Harrington. "... by doing basic community banking - banking with the people we know and taking good care of them, and having them refer their friends and neighbors to us."

Originally established as Old Missouri National Bank, a nationally chartered bank under the Office of the Comptroller of the Currency, Old Missouri converted to a state-chartered Federal Reserve member bank in 2008.

From a regulatory perspective, "we had a feeling that the state is a more decentralized approach, and just might be a little more flexible in the way banks need to operate and respond to the needs of their communities, and we've been very satisfied," Harrington said of making the switch. Also, regulatory fees are lower for state-chartered institutions, and lending limits are higher.

"The legal lending limit for a state bank is 25 percent of capital, and for an OCC bank it's 15 percent of capital," Harrington said.

Diversified, managed growth

Growing the asset base from $4.6 million to $110 million is significant, but occurring over the course of a decade, it also represents a pattern of slow, steady growth.

"Almost all of our growth has been organic," Harrington said. "We've grown along with some of our customers, and then they've referred family, friends and neighbors."

Local connections and the personal touches are keys to success as a community bank, according to Kathy Griesemer, assistant vice president of loan operations.

"People don't want to talk to somebody in St. Louis or Kansas City; they don't want to wait three or four days for their title to come back to them," she said. "I think they want to know they're dealing with somebody that they can get what they need quickly and have a one-on-one relationship with them."

Old Missouri's loan portfolio is diversified, with no one component making up more than 25 percent of its asset base. Most of Old Missouri's lending is in three areas: agricultural, small business and one- to four-family residential lending.

But don't look for exotic mortgages on Old Missouri's books.

"We aren't out there buying mortgage loans or doing the liar loans or the option-ARM loans or any of those things," Harrington said.

Also, he noted, Old Missouri has been fortunate in that it has done very little construction and development lending, considering the ongoing slowdown in that sector.

Still, like all banks, Old Missouri has had to deal with the nationwide fallout from risky lending practices in the banking industry.

"They are continually changing regulations and putting pressure on the banks all across the country, regardless of whether they've been involved in unsafe practices," said bank director and original investor Sam Hayes, who works at Fabick Cat in Springfield. The big picture in the industry "does make a difference to us on a daily basis, but our fundamental direction and the way we operate is pretty much status quo," Hayes added.

Like many banks, Old Missouri did think about taking Troubled Asset Relief Program funds, but chose to pass.

"We considered it," Harrington said. "All of that came out last fall when credit markets were very, very tight. We sat around and (asked), 'How are we going to fund ourselves if the overnight money markets shut down?' And what we mainly did was took some longer term advances from the federal home loan bank just to make sure we had adequate liquidity on the balance sheet."

Looking ahead

Not interested in following the herd, Old Missouri has not pursued an aggressive branching strategy, maintaining two locations at 1535 W. Sunshine St. and 3570 S. National Ave. in Springfield.

"We talked in late 2007 and early '08 about (adding branches) and even looked at a couple of locations, and then as we saw things tighten up and the economy get tough, we decided we'd just take a wait-and-see approach," Harrington said, noting that a new branch will be considered in next year's strategic plan.

In the meantime, "we want to grow at as fast a pace as our capital will allow us to safely grow," Harrington said. "For us, that's typically trying to grow in the 10 (percent) to 15 percent range a year."

Hayes agreed, noting that Old Missouri's future lies in "safe and steady growth, keeping an eye out for other opportunities all the time, and keeping ourselves in the position to take advantage of opportunities as they arise."

What those opportunities might be depends on the market, but bank officials say Old Missouri's solid foundation gives it many choices.

"For us, everything is still possible," Harrington said. "We'll try to grow at a reasonable pace, keep our balance sheet clean and just do whatever will maximize the value of our shareholders and is consistent with serving the people that we serve."