Business Bank is on the hunt to buy locally
St. Louis Business Journal
Greg Edwards - Reporter
With $10 million in new capital, The Business Bank of St. Louis is ready to make an acquisition. It wants to buy a bank in the area, expand its single-branch model and eventually double its assets to $1 billion.
With encouragement from its government regulator, the bank, with $534 million in assets, has formed an acquisition committee that has been meeting to explore possible deals for banks with assets of $100 million to $200 million. “That’s our sweet spot,” said Larry Kirby, who has been president and chief executive for three years.
The acquisition committee is led by board member Eugene Harris, managing member of Step Change Advisors, and Chairman Chuck Thal, managing member of Financial & Marketing Solutions. “We’re looking at banks in the area – we’re not looking to go far out,” said Stan Cornish, chief operating officer of The Business Bank.
“There is a belief that banks will need to be large enough to absorb the additional cost of regulatory compliance and technology,” said Joe Porter, a mergers and acquisitions lawyer at the Polsinelli law firm. And in St. Louis, where loan demand is weak, banks see a merger as a way to add business.
The Business Bank’s one-location model is unusual, and it wants to add a few branches with a purchase. Kirby said the bank has about exhausted the deposits it can reap from its Clayton location alone. In anticipation of growth, the bank has expanded its space at 8000 Maryland Ave. to 22,000 square feet from 14,000 square feet. It has 67 employees.
The bank took $15 million in Troubled Asset Relief Program (TARP) money in Aril 2009 and completed its payback in April 2013. “We were looking to replace TARP with active capital,” said Brian Leeker, chief financial officer.
Enter Castle Creek Capital of Rancho Santa Fe, Calif., which made its $10 million investment through a fund that invests in community banks throughout the United States.
Also since 2009, The Business Bank has shrunk its high-risk loans from $200 million to $30 million. At the same time, it was adding high-quality loans at a rate of $100 million a year, Thal said.
Throughout the recession, The Business Bank maintained healthy risk-based capital of more than 12 percent.