A Formula for Success

PUBLISHED MARCH 2025

Two things can be said with certainty about the American banking system in the Covid-19 and post-pandemic era:

• One: The onset in 2020 was an absolute stunner of a year for banks, which saw their aggregate net income fall by more than $100 billion nationwide.

• Two: The industry has been among the economic Comeback Kids since that awful year, with interest income up 80 percent since the 2019 pre-Covid year and net income up 17.14 percent.

As uplifting as those numbers are on a national scale, what’s happened in the Kansas City region is, on multiple levels, even more encouraging. In key metrics such as assets, deposits and net loans and leases, the nearly 90 regional banks operating here have simply blown away the performance of their peers nationwide.

The numbers jump off the page from FDIC reports. Take a look:

Assets. While all U.S. banks recorded a healthy 24.93 percent increase in combined assets since 2019, banks in this region roared past that mark, up 42.67 percent.

Deposits. Banks in this market nearly doubled their combined deposit growth over that same period. They surged 42.67 percent, compared to 22.63 for banks nationwide.

Net loans and leases. This key indicator, which hints at future business growth and expansion in this region, jumped a dazzling 30.34 percent since 2019. By comparison, the needle barely moved for banks nationwide in that same span, up just 2.37 percent.

As a result, the Kansas City banking market overall is stronger, more stable, and represents a larger share of the nation’s banking sector than it did in 2019. Why?

Jim Rine, CEO of UMB, says that “In general, the Midwest’s economy, including Kansas City, is more stable than the coasts, as evidenced from the bust and boom times those areas have seen at different points during the past two decades. From a Kansas City perspective, we have seen continued, cautious optimism.”

Overall, he said businesses in this region have performed well during the past 12-18 months, “and we expect that to continue. While we’re still watching the economy for a bumpy, soft landing, companies seem well-positioned to manage and maneuver the current environment.”

Jackson Hataway, CEO of the Missouri Bankers Association, also attributed performance here to regional values. 

“No. 1, and this is very true, the methodical, Midwest banking practices are being proven to be very sound—we’re just not as volatile as other regions of the country,” he said. “We’ve seen that over the course of years, as with times of recession. Banks in the state, and particularly in metro areas, fare better because things aren’t as volatile.”

Big Change, But Not Seismic

Over the past five years, going back to just before the 2020 pandemic, some significant moves have repositioned some of the region’s biggest banks.

Foremost among those was UMB’s recent $2 billion acquisition of Heartland Financial USA. It further cements UMB’s claim to being the region’s largest hometown bank, a title it seized from Commerce Bank nearly a decade ago, with the gap steadily widening since then. 

With the Heartland deal, UMB’s assets rose to more than $68 billion. That’s still well below the $250 billion threshold that Congress has set to determine banks that are “too big to fail,” but it nonetheless thrust UMB into the Top 40 nationwide by that metric. 

“There are good reasons for that,” said Jim Rine.

“Our business model emphasizes diverse revenue sources, high-quality credit metrics and a strong balance sheet,” he said. “Additionally, our contribution from fee income, which complements and supplements our interest income, helps ensure we are not overly dependent on margin or interest rates, which enables us to maintain our long history of strong credit quality by lending selectively.”

The second major deal came with the growth of CrossFirst Bank during the past five years. Founded in 2007 amid the Great Recession and gaining traction during the 2008 financial crisis, CrossFirst went on to become the second-largest Kansas-based bank by the end of 2024, with assets of $7.7 billion that had it closing the gap with No. 1 Capitol Federal of Topeka ($9.2 billion).

During that span, CrossFirst went from a private enterprise to a public company in an initial stock offering that raised more than $101 million just months before the pandemic hit. Then, it reached a deal finalized earlier this year to merge into Illinois-based Busey Bank, a deal valued at $916 million and one that pushed combined assets past $20 billion. Soon to be rebranded in its existing markets with the Busey brand, CrossFirst climbed to the fourth-largest in asset size among regional banks. 

CrossFirst, CEO Mike Maddox noted, is an example of what can happen when a fundamentally sound bank is positioned to seize opportunities presented in this climate.

“It’s been much the same since the pandemic,” he said. “With strong capital and credit quality positions, we’ve been able to continue our rapid growth trajectory despite the initial economic downturn and maintain that growth with record earnings in 2024.”

The partnership with Busey has him excited about operating in an expanded geography. “Our strategy has always been that we want to be in dynamic, growing markets that have a strong business climate,” Maddox said. “Kansas City has been exactly that, and through the great relationships we’ve built in the area and additional services we can now offer, we see it only getting stronger for us.”

Grow … or Risk It All

The CrossFirst experience reflects pressures on many banks to scale, pressures that have prompted sweeping consolidations across the sector. Just a generation ago, in 1995, the nation had just under 12,000 banks—a figure that had already been reduced by a third in the previous decade. The decline in numbers accelerated from that point, and the number fell below 4,000 last year.

A big driver of that trend has been an increasingly tighter regulatory grip from Washington. As more detailed and complex financial reporting requirements have been put in place, the smaller community banks have been unable to spread their compliance costs out the way their larger competitors can. The irony there is that those regulations have often been ratcheted down after headline-making failures of megabanks, rather than addressing systemic flaws in the community banking sphere.

Another has been the aging-out of bank ownership, as the past two generations of family-owned and closely-held banks saw their leadership retiring. With no members of those inner circles stepping in to take over, selling to competitors was the only reasonable outcome, though in some cases, rural banks simply ceased to operate.

Hataway cited the positive impact of regional banks moving up a notch in the nation’s pecking order, especially with the ability to promote business growth and expansion.

“Any time you have banks that are regional in scale to slightly larger than that common threshold, that definitely has some pull toward it—crucial mass that generates more business activity,” he said. “While some now may be in a lot of markets around the country, they’re still centered in Kansas City and Missouri at their core. That’s good for the state, good for the region, and good for the banks themselves because it should attract more activity.

Time will tell what the true impact of bank growth here will be, he said, “but we expect to see more business, with more capital deployment.”