As banks merge, acquire and consolidate, it may seem the small community bank is becoming endangered. But in fact, community banks—those with less than $300 million in assets and not owned by a large bank holding company—are doing just fine, thank you. According to the Federal Reserve Bank of St. Louis’ Regional Economist (Oct. 1999), of the 8,567 U.S. commercial banks in business in the first quarter of 1999, 6,982—82 percent—are community banks.
In the St. Louis area, community banks are not only NOT disappearing, but new ones are opening, like Founders Bank (Jan. 1996), Concord Bank (Aug. 1996) and Frontenac Bank (Feb. 1999). All were started by banking entrepreneurs who built success through a combination of experience and connections—and good timing.
FOUNDERS BANK
Craig Conway is president, chief executive officer of Founders Bank, located in Chesterfield, Glendale and soon, Chesterfield Valley. “A few years ago when interstate banking legislation was passed, I considered the ramifications of what that might do to banking,” Conway says. “I was certain that customers would get lost in the shuffle, if and when there were massive acquisitions. I thought it would be a good time to start a small community bank and bring back personal service.”
Conway, previously affiliated with Spanish Lake Bank, American Bank, Mark Twain Bank and Gateway Mortgage Co., lined up 160 stockholders. “For a small bank that’s very unusual, but I did it on purpose,” Conway adds. “I wanted to have a lot of salespersons out there talking about the bank.” The 14-member board consists of people who had served on other bank boards “and are comfortable in that role,” he says, “plus I added some younger board members to bring in new ideas.” The bank currently has more than $65 million in assets.
At its start, Founders Bank targeted high-income, high-net-worth individuals in Chesterfield, plus small businessmen in construction and real estate. “My 30-plus years in local banking have been helpful,” Conway says. “Knowing who not to do business with can be just as important as knowing who to go after.”
But all business is welcome, and that’s why Founders has a solid base of loyal depositors. Conway says he recently got a call from a woman who said she was bringing in a $10,000 deposit. “She said, ‘I know that’s small potatoes to you,’ and I told her, no, it’s big potatoes to us! Every dollar is important.”
Founders Bank attracts those dollars by advertising in Chesterfield, “on whatever we can put our name on,” Conway says. He serves on eight local boards and encourages his staff to join community organizations, too. “There’s no substitute for contacts and networking,” he says. “That brings us the most and best business.”
CONCORD BANK
Dennis Geoghegan, chairman, president and chief executive officer of Concord Bank, grew up in South County, and worked in South County banks most of his career. The only time he didn’t was when he was asked to fix a troubled bank in Clayton. “It was quite a challenge but I enjoyed it,” he says. “It gave me the idea to start a bank from scratch and not make the mistakes that were made there.”
Knowing what mistakes to avoid plus knowing the neighborhood contributed to Concord Bank’s early success. Geoghegan adds it didn’t hurt that the new bank spent its first year in a trailer. “It kept our overhead real low and attracted attention,” he says. “A radio station called it The Bank In The Trailer.” When the bank’s building was completed behind the trailer, “a tow truck pulled it out and away we went.”
Geoghegan picked the location because it has more than 35,000 cars going by every day and it’s at a stoplight. He put up a big sign on which he advertises rates when he needs to boost CD or loan business. “Our deposits come from a two-to-three-mile radius,” he says. “In South County they bank where the rates are, and small banks can pay more for deposits than big banks.”
Loan customers, on the other hand, come from all over the area. “I’ve been loaning money to the same people for 25 years,” Geoghegan says. “After all, money is money! Loans are relationship driven. When someone wants to borrow money, he’ll find you.” Another attraction is former appliance salesman and local celebrity Steve Mizerany. “He’s retired and comes in every day to greet people and help me out,” Geoghegan explains.
Concord’s 13 board members come from construction, real estate, manufacturing and other industries. The bank has one location and nine employees. “Our philosophy has been to keep labor and lobby traffic to a minimum,” Geoghegan says.
With $80 million in assets, Geoghegan predicts Concord will hit $100 million next year. “At that size you can do other things,” he says, like expand products, services and locations. For now, he’s benefiting from a strong economy that encourages business start-ups, and from bank consolidations that send customers to a community bank. “People get confused when their loan officer leaves town or they find out their bank isn’t a lending unit anymore,” he says.
As banks merge, acquire and consolidate, it may seem the small community bank is becoming endangered. But in fact, community banks—those with less than $300 million in assets and not owned by a large bank holding company—are doing just fine, thank you. According to the Federal Reserve Bank of St. Louis’ Regional Economist (Oct. 1999), of the 8,567 U.S. commercial banks in business in the first quarter of 1999, 6,982—82 percent—are community banks.
FRONTENAC BANK
Kathy Flemming was “class banker” in fifth grade. “I rode with my teacher to the bank every Friday to deposit the class money, and told the bank president I’d have my own bank some day,” she recalls. Since then she’s worked in real banks in New York, Tennessee, St. Louis, even in the Pentagon Bank in Washington, D.C. Today she’s president and chief executive officer of Frontenac Bank.
“With the latest round of bank mergers, the timing was right for a start-up,” Flemming says. “There hadn’t been a new bank in St. Louis in more than two years.” The bank’s seven-member board and 31 investors targeted two underserved areas, opening first in Earth City, where, Flemming says, there are 300 businesses and 20,000 employees and no other bank. The actual Frontenac-based Frontenac Bank will open in April.
Among Frontenac Bank’s customers are professional athletes, a niche Flemming carved out 10 years ago. “They and their families have special needs no other banks were serving,” Flemming says. Frontenac Bank offers complete relocation services as part of its professional athlete relations business.
Other targeted customers are small businesses that “fall below the radar of larger banks,” Flemming says. “But our customers come from all over St. Louis, because we make it convenient. Some people need a bank nearby, others care more about service. If they can’t come to us, we go to them.”
The result is that banks are “coming full circle,” Flemming believes. Banks had always been small and community-focused before the mega-banks moved in. “But people’s lifestyles are changing. They’re returning to small businesses and home-based businesses,” she says. Now the challenge of community banks is to understand the changing demographics and provide for the customers of the future. “That means old-fashioned, personalized service, whether it’s face-to-face or through the Internet, telephone, or couriers. Community banks prove you can make money the old-fashioned way.” That philosophy helped Frontenac Bank cross the $40 million threshold in assets in just 10 months.
BANKERS HAVE A BALL
“I can’t think of anything I’d rather do than run a bank,” Conway says. “Helping individuals grow and prosper, that’s what I really enjoy, the relationship aspect.”
Geoghegan agrees. “I’m having a ball,” he says. “I can look back to loans I’ve made to people who have become very successful. I loaned money to build subdivisions where 40 or 50 families live now. And I’ve made a lot of friends along the way.”
Flemming: “Is it fun? Absolutely! We can help people realize their dreams. Someone helped us realize ours.”
