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Missouri holding company completes conversion plan

Southern Missouri Bancorp of Marshfield, Mo., has converted to a bank holding company from a thrift holding company. The move is the culmination of a five-year strategic plan to convert the company's bank, Southern Missouri Bank and Trust, to a commercial bank from a savings bank.

"Five years ago, I came on board and brought in my own group of people and we've been in the process of converting our institution," said Greg Steffens, president of the holding company and the bank. "It's a process that takes time."

Since 1998, the bank's balance sheet has changed dramatically. "If you look at our funding mix and our asset mix, residential loans used to be 85 percent of our asset base," Steffens said. "That has declined to around 50 percent. We have focused on growing the commercial business to offset that part of our balance sheet."

The bank's funding mix has also changed. In the past, it was primarily made up of certificates of deposit. "All of our deposit growth has been in checking and money market related accounts and a lot of commercial business accounts," Steffens said. "Basically, we've changed the composition of our asset sheet to be more like a bank."

The conversion followed a well-orchestrated plan that came to fruition just as the former state savings bank was busting its seams.

"As a thrift holding company, we were subject to Missouri's qualified thrift lender test," Steffens said. "We had a percentage limitation of how much we could have in business loans and commercial real estate loans. We were reaching points where over the next year, we were going to be impacted by those rules and become limited in the amount of commercial growth on our balance sheet. We didn't want our charter to limit our business plan."

The conversion has resulted in significant growth. Five years ago, the bank was at $165 million in assets. On June 30, the bank topped $315 million.

Its physical composition also changed. "We built two new facilities and sold two facilities that were in lower-growth markets that didn't meet our vision for the future," said Steffens. "We also acquired two facilities from another company. I'm proud of our growth. Our stock price has gone up quite a bit in the last few years."

Iowa bank moves northeast into Hospers

The $35 million Community Bank in Alton, Iowa, has purchased a mobile branch and parked it in Hospers.

"It's a modular that we purchased from a bank in Spencer," said Community Bank President Tom Kiernan. "We'll operate out of that until we're comfortable and have decided what our next step will be. There's no crystal ball as to when we make a permanent move, but we've got a property bought and we're on it."

Hospers, population 650, is eight miles northeast of Alton. The town already has one bank, a branch of the American State Bank of Sioux Center, Iowa. Agricultural lending is the predominant service. Community Bank's familiarity with the region influenced the move.

"The proximity was key," said Kiernan, a third generation banker. "It works geographically. It's a territory that we continue to have growing customer contact in. We looked at the community and decided there was enough room for another bank in there. It appeared as though it were a great opportunity."

The modular bank will house a staff of three: an office manager, an accounts person and a vice president.

Community Bank has one other branch in Orange City. "We do more real estate lending in that town," said Kiernan. "It's a town of 5,500, so there's more people and more opportunity."

As for the regulatory process of branching, Kiernan said there were no obstacles. "It was a pretty seamless process," he said. "You answer the questions, send it off, dance the required dance of waiting for publication and so on. You follow the rules and it's not a difficult process at all."

Kansas bank expands within challenging market

The State Bank of Winfield, Kan., has purchased the Bank of Commerce, Udall, Kan. The $9.1 million Bank of Commerce will become a branch of The State Bank - its first outside of Winfield.

"It's a small independently owned bank that's been there in Udall for many, many years," said Steve McSpadden, president of the $98.5 million, locally owned State Bank.

The area economy has been struggling, said McSpadden, and growth has been difficult.

"Our markets in general have been somewhat depressed," said McSpadden. "We're about an hour out of Wichita. The Wichita economy has been badly depressed since 9/11, particularly in the consumer area where our lending department has been challenged to a considerable degree."

The move into Udall will help expand the State Bank's lending base. "Commercial lending is the principal part of our portfolio in Winfield, although we do some agricultural lending," said McSpadden. "Udall has a larger ag base, so that will be a good part of what we do there."