Critics say R. Crosby Kemper's egocentric management style is at least partly responsible for United Missouri's inertia. Mr. Kemper is unfazed.

KANSAS CITY, Mo. -- Presiding at an annual meeting two decades ago, R. Crosby Kemper proudly told stockholders how good the previous year had been for United Missouri Baneshares.

But as the chairman and chief executive spoke about the record year, he was interrupted from the front row. "Crosby," said his mother firmly, "quit your bragging."

These days, Mr. Kemper has considerably less to brag about.

With high credit quality and strong capital, United Missouri has avoided the bad times which battered its peers.

Stagnation

But the $6.5 billion-asset bank has been in a funk over the last three years as earnings stagnated and its stock price effectively stood still. Return on assets slipped to an abysmal 0.71% in 1993.

Mr. Kemper, Who at 67 has no plans to retire, argues that the bank's value has grown nearly four-fold in the last decade.

But critics complain that his egocentric management style is at least partly responsible for the bank's inertia. Indeed, the ouster this spring of the one-time heir-apparent, president Malcom M. Aslin, baffled analysts, who say it is only further proof that the bank is still run as if it were privately held.

"This bank is run more on a personal level than a corporate one. It's not clear they want to maximize shareholder value," says James Benson, director of research at Ryan, Beck & Co.

Adds Anthony Polini, a banking analyst at Mabon Securities, "Crosby Kemper rules with an iron fist. He is by far the strongest personality in the company."

Some analysts privately suggest that if Mr. Kemper did not own 17% of the bank's stock, he likely would have been ousted by now. His insistence on keeping assets liquid caused the bank to miss the recent industrywide bubble in net interest margins.

"As the largest shareholder, I'm delighted and I wouldn't fire me for anything," Mr. Kemper responds.

Indeed, he believes the industry would be stronger if more banks operated the way United Missouri does. Mr. Kemper personally reviews most loans, and says judging character is critical to who gets funds and who doesn't.

Critical of Competitors

"We're lending our own money here," he points out. "We have to be careful because we just can't go on to the next job. We don't have a golden parachute."

He dismisses any criticism of the bank or his management style. And he calls his competitors short-sighted and already poised for another credit crisis in as little as two years.

"I worry about that Marine in North Carolina," he says, pointedly referring to Nationsbank Corp. chairman Hugh McColl.

Mr. Kemper claims the press is overzealous and gives him short shrift while idolizing Kansas City banks that became insolvent by making risky loans.

"For years I've had new people tell me I didn't know how to run a bank," he said. "Every one of them is either in prison, dead or out of the business."

He says stock analysts are often uninformed, while conceding that his bank makes little effort to provide access to Wall Street.

One analyst said United Missouri" mails us the annual report and that's about it."

No Love for Regulators

But he reserves a special place in verbal purgatory for regulators and Congress. In the 1993 annual report, he offers condemnation and advice to both.

"I think the biggest problem facing the banking business is that Congress and the various government agencies and the regulators are trying to micromanage our business. [It's] an act of revenge for the savings and loan mess that they largely created and to get banking assets to accomplish social programs for the liberal agenda," he wrote.

His advice: regulators should be more concerned with illiquidity and the use of derivatives by major banks.

Sitting in his downtown office here, Mr. Kemper is unrepenrant about his brash views. Indeed, he may be simply expressing the popular outrage of an industry afraid to provoke the wrath of regulators.

"I think people need to take leadership on these kinds of issues," he says. "We had about 1,000 bankers in here the other day for a meeting, and when I said these things they interupted me several times with applause."

Mr. Kemper is frustrated that United Missouri has to deal with regulation brought on by the past sins of others. That includes everything from higher deposit insurance premiums to suggestions that bankers need sensitivity training to address suspicions of lending bias.

"Consequently, I have to bail those sons of bitches out when they get into trouble, and I'm going to have to do it again," he says, throwing his arms up in fake surrender.

His son, Alexander "Sandy" Kemper, the 29-year-old president of the lead Kansas City bank, agrees. He estimates that if United Missouri copied other banks and invested most of its assets for an average of five years, earnings would increase by $45 million pretax.

Too Conservative?

"It's frustrating to see the success of other banks and never participate in it," the younger Kemper says. "But we are there the morning after."

To maintain that liquidity, United Missouri's maintains a loan-to-deposit ratio that is seldom above 55% - weak at a time when most banks are pushing to be in the 70% to 90% range. The Kempers are comfortable with their level, but say they are often unfairly criticized for too conservative.

It is a label they disparage. "Call us responsible," Sandy Kemper said. "Conservative is a bad word."

More Commericial Lending

While the Kempers insist they nave not changed their strategy, competitors and analysts say they have noticed a more aggressive move into commercial lending since the younger Mr. Kemper took over the area.

Last year, the company saw loans rise to $2.2 billion from $1.5 billion in 1992. Exclusive of $509 million in loans acquired with a dozen Kansas banks, the company reported a 15% increase in core lending.

"They are definitely changing their stripes a bit," said Joseph Stieven, senior banking analyst at St. Louis-based Stifel, Nicolaus & Co. "They're a more aggressive lender today."

For their. part, the Kempers say outsiders just don't understand. They note the bank's fiat earnings have been a result of heavy technology investments in businesses such as mutual fund processing.

Fee-based services contributed 43.4% to the bottom line last year and executives say that will only grow as the investments payoff.

The company spent $178 million to acquire more than $1 billion in assets largely on the Kansas side of their metropolitan home base. The deals diluted 1993 earnings by 9.8%, or an estimated 28 cents per share. With the worst over, merger efficiencies should show up in the bottom line beginning next year.

"Acquisitions really stalled earnings out," said Jim Weber, analyst at A.G. Edwards in St. Louis.

Maintaining the Status Quo

Absent the short-term pressures facing many bankers, Mr. Kemper can afford to continue to do things his way. With no plans to sell the bank, he is content with his place in a corner of the banking industry, protecting his family's stake and United Missouri's franchise.

For those outsiders who question whether other shareholders win with that kind of approach, Mr. Kemper responds that things are not likely to change.

"I'm never going to retire," he says. I may name a CEO someday. After all, I've got the stock." And indeed he has: some 2.97 million shares of it.

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