St. Louis' Southwest Mines the Middle Market
Bronstien, Barbara F., American Banker
ST. LOUIS -- To say Andrew N. Baur enjoys running Southwest Bank of St. Louis would be an understatement.
"This is the greatest business in the world," proclaims the chairman and chief executive of the $697 million-asset bank and its holding company, Mississippi Valley Bancshares.
Of course, it's easy to be enthusiastic with his success in his chosen niche, commercial and industrial lending. Pointing out that all but about $90 million of Southwest's $520 million loan portfolio is commercial and industrial loans, Mr. Baur said, "You can see just from our numbers that we're obviously fulfilling a mission in the community," he said.
"We are a commercial-lending machine," he added. "There really isn't another bank quite like us in the community, with our very focused approach."
Mr. Baur, who turns 50 later this month, has many yarns to spin about his colorful bank. Sporting a bow tie and waving a cigar, he pridefully offered various trivia about Southwest - the "longest" bank in St. Louis, as Mr. Baur put it.
Renovated in 1987, Southwest's home office spans a city block in "The Hill," traditionally an Italian enclave.
Before the bank opened in 1920, part of the building housed a saloon owned by Anheuser-Busch, whose trademark eagle evolved into Southwest's own logo, he said.
His predecessor, Isaac A. Long, who bought the bank in 1953, continued to work there until his death last November at the age of 94.
Seeking a Suitor
In 1984, Mr. Long was 85 and searching for a buyer who would keep Southwest independent.
At the same time, Mr. Baur was shopping for a bank to buy, having left St. Louis County Bank, Clayton, Mo., after a hostile takeover by a former employer, Commerce Bankshares.
He and Southwest made a good match. Mr. Baur, who started his banking career in 1967, is naturally geared toward community banking, said Linn H. Bealke, Mississippi Valley's president and vice chairman of the bank.
"He's a real people person," said Mr. Bealke, who has worked with Mr. Baur off and on since 1975. "He's got great loyalty. There are cut-and-run lenders, and we're not one of them."
When the investor group led by Mr. Baur and Mr. Bealke bought Southwest, the bank had $110 million of assets and a $55 million loan portfolio with just one commercial loan.
A Neglected Niche
But the new owners saw an opportunity to pursue middle-market business, a fast-growing market segment in St. Louis that the city's larger banks typically neglected - but that has more than enough business for community banks, said Joseph Stieven, an analyst with Stifel, Nicolaus & Co., St. Louis.
"In the St. Louis market, there are really not many banking institutions that can compete in this range," he said.
Implementing a business-lending focus involved two major risks, Mr. Baur said. One, maintaining the bank's longtime consumer base, ultimately wasn't a problem because retail customers saw few changes.
Also, because Southwest knows that deposit loyalty can be lost on a quarter point, "They pay up for deposits," Mr. Stieven said.
The other gamble was to lure some of the new owners' former commercial-lending customers - as well as new business - to Southwest, though the bank was not in a major business district.
However, Mr. Baur said, "Borrowers really were much more interested in the people they were dealing with than the location where they had to deal."
The bank has since built two branches in other parts of the metro area, adding increased access for commercial customers.
"Our [growth] strategy has never been to buy banks," Mr. Baur said. …