Trio of new banks get off to fast start

by Paul Flemming

SBJ Staff

Springfield's three newest banks came in like a lion when they each opened about a year ago, and executives of the startups say the roar is going to continue.

"It's been a mind-boggling experience," said Todd Parnell, president and chief executive officer of The Bank, of the first year. His biggest challenge, he said, is finding enough hours in the day to handle the wave of business.

That is a sentiment echoed by executives of the other banks.

Each is growing, in assets, staff and locations, and they are refiguring projections for future growth. Initial projections by the banks in their charter applications became largely moot when business exceeded those predictions.

Village Bank has $26.5 million in assets, The Bank reports $59 million in assets and Signature Bank stands at $59.2 million in total assets. All exceed or approach goals their management teams initially thought would be reached more than two years hence.

Though perhaps the easiest figure to cite, total assets do not tell the whole story. Also telling, the bankers say, are net interest margin, capitalization and income figures. Each bank has pursued its business plan in its own way and arrived at the first anniversary of opening with its own set of successes.

Common to all three was the credit accorded their respective directors and the business they have drummed up.

"We're growing at a sensible rate," said Village Bank Chairman Jim Street. "We're being a prudent lender, and we are very conscious of being a conscientious steward of our investors' money."

Street said Village has more than $8 million in loans and about $22.7 million in deposits. Village's net interest margin is between 2.25 percent and 2.5 percent, Street said.

Village opened in temporary quarters in 1997, but in December moved into its own building at 2360 E. Sunshine. That building project, Street said, meant construction costs that his competitors will incur as they build in the future. Village is "close to breaking even," Street said, and has lost less money in its first year than Signature or The Bank.

Land for a second location has been picked out by Village, Street said, and its board is pursuing the purchase of another bank, either to merge into Village or for separate ownership by its holding company.

Parnell said The Bank has $34 million in loans and $48 million in deposits. The Bank has opened a second branch at 3333 E. Battlefield and purchased 2.5 acres at the corner of Fremont and Kingsley, where it will build a new bank building, projected to open in the spring of 1999.

The Bank now has 17 full-time employees, with four of those at the Battlefield branch. The Bank, Parnell said, showed a profit in February and March of this year, but with startup costs for the new branch, lost money in April and May.

Though profitability came six months ahead of projections, Parnell said, The Bank lost more money in its first 10 months than predicted because of faster-than-anticipated growth of loans. He attributed the losses to an aggressive loan-loss reserve, which The Bank maintains at 1 percent of loans booked.

"We've covered our operating expenses much more quickly than we thought we would," Parnell said.

Parnell and directors Jay Burchfield and Eugene Everett credit a broad base of investors there are about 80 and the ownership participation of its employees with much of The Bank's success. In addition, The Bank added Nikki Sells and Roseann Bentley to its board.

Director Jack Stack, CEO of Springfield ReManufacturing Corp. and open-book management advocate, has been a part of directing the bank's program.

Traditionally, "if there were a set of financials on a desktop, (bank employees) were trained to avert their eyes," Stack said. Now, The Bank employees, as shareholders who are clued in to the bank's financial operation, are active participants in The Bank's success and a source of innovation. "They're going to push the board," Stack said.

Signature Bank has $42 million in loans and $51.9 million in deposits. President and CEO David Kunze said Signature posted pre-tax income of $150,000 in the second quarter, with a 4.25 percent net interest margin. Signature opened its first branch June 16 on East Sunshine and has purchased land at Republic Road and Kansas Expressway, though a building there is not in the immediate future.

Signature now has 21 full-time employees. Of those, 18 are former employees of Boatmen's Bank, where Kunze and Chairman Chuck Tice were executives.

In the first quarter, Signature upped its loan-loss reserve to 1 percent from the 0.4 percent it had been, as was set forth in its business plan. Kunze said loans booked in its initial months of operation were largely with accounts that had a track record with Signature's officers.

"We've had quality from the start," Tice said. "We have not had to lower our standards to attract business."

"If I were to give us a grade, it might be an A+," Kunze said. "But we're a long way from graduation. One year does not make a success. It's nice to have a good report card at the end of the year, but there's still a lot to be done."

Kunze said Signature projects total assets in excess of $65 million within the next six months.

"In the next year, I think we'll double in size," Street said of Village Bank.

And executives at all three banks said the effort at continued aggressive growth will occur in an environment of respectful competition.

"Every day is a battle," Parnell said. "The people we are competing against are all very able. But there doesn't seem to be a lot of negativity."

"It doesn't have to be an us-vs.-them story," Kunze said. "We all compete on a daily basis, and yet it's a friendly atmosphere."

"There's enough new business to satisfy everybody," Tice said.

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