Community bankers aren't singing the St. Louis blues.
Quite the contrary, they are raking in deposits, boosting loan volumes, and partaking of an expanded talent pool in the wake of a series of big- bank mergers.
Since December, Boatmen's Bancshares has been taken over by NationsBank Corp. of North Carolina, and Mark Twain Bancshares and Roosevelt Financial Group by St. Louis rival Mercantile Bancorp.
"We talk to customers who bank with both us and the bigger banks," said Michael J. Ross, chairman and chief executive of $460 million-asset Delta Bancshares, St. Louis. "They're unhappy with what's going on with the bigger banks. There are just too many changes."
The community banks were drooling at the prospects-and the results began to appear even before all the big mergers had been consummated.
According to call report data compiled by Sheshunoff Information Services, an affiliate of American Banker, St. Louis-area banks with less than $3 billion of assets increased both loans and deposits by more than 5% from Sept. 30, 1996, to March 31, 1997.
By contrast, the region's largest banks-Boatmen's, Mercantile, Mark Twain, and Magna Group-were flat or even down in those key categories. Their demand deposits fell 5.63% during the two quarters-15% in the first quarter alone.
Only in consumer lending, where community banks tend to be weaker and saw negative growth, did the larger banks report a significant increase- 12.5%.
"All of the smaller banks are seeing an inflow of business, plus they're getting a great look at employees," said Joseph A. Stieven, senior bank analyst at Stifel, Nicolaus & Co. in St. Louis.
Even Magna and Commerce Bancshares of Kansas City, large Missouri-based regionals, are seeing "some good inflow of business," Mr. Stieven said.
These are effects that acquisitions have always been known to produce but are magnified by the sheer volume of deals recently.
For decades the Missouri banking market had been stable because of laws that effectively kept out the growing giants from other states. Boatmen's and Mercantile each grew "domestically" and developed profitable relationships with customers who became accustomed to the stability.
Once the merger floodgates opened, however, the ramifications of interstate banking hit Missouri hard.
During the six months through March 31, real estate loans rose more than 6% at the under-$3-billion-asset banks. Demand deposits soared almost 10% just in the fourth quarter.
Mississippi Valley Bancshares, parent of $1.23 billion-asset Southwest Bank, Missouri's largest independent community bank, recorded an 8% increase in loans from October through March.
The bank brought in $110 million of new loans in the first six months of 1997, a 15% increase since Dec. 31, while deposits rose $176 million.
"We've seen some pretty strong growth, particularly the loan side, since the first of the year," said Paul M. Strieker, chief financial officer.
First Banks Inc. of St. Louis reported a 7% increase in loans at one of its subsidiaries in the first quarter.
"We haven't had this kind of growth for a long time," said James F. Dierberg, owner and chairman. "I'd have to go back in my memory a few years to when we had it this good. I suspect that we're not the only ones."
But the economy is strong, and even NationsBank is saying its efforts in St. Louis are paying off. Spokeswoman Julie Westermann cited a doubling of consumer loan volume since January and a tripling of small-business loans in the first six months, compared with Boatmen's volume during the same period last year.
"We're doing far better in St. Louis than we ever anticipated in that merger," Ms. Westermann said. "It's been extraordinary."
She added that all the local banks are benefiting from general economic growth.
Officials at Mercantile could not be reached for comment.
In recent months, St. Louis' smaller institutions have unleashed a wave of advertising touting their independence and history, as well as their advantages over the larger banks.
First Banks has been promoting its status as a privately held company that is not for sale. One radio spot features an auctioneer selling off the region's larger banks.
Mr. Dierberg said he expects the larger banks will eventually "get their act together." He said there are rumors that NationsBank has "something in the wings" to recoup its customer base.
Ms. Westermann said NationsBank "has an aggressive business plan, and we're going to be going after everyone's business. We're not going to be doing anything different than we do in Baltimore or Tampa."
"Times are good for the small banks right now," said Timothy W. Willi, regional banking analyst at A.G. Edwards in St. Louis. "They're taking advantage of it, but it's not going to be like this forever."
