A History We Can Still Bank On

If you were to ponder the history of banking in the Kansas City area, and think of one historical figure who cast a shadow that’s still visible 50 . . . 100 . . . even 150 years after the city’s founding, you might be tempted to say it was William T. Kemper.

And that would be a very good guess. But there are reasons why it might not be the best guess. William T. was indeed patriarch of the Kemper clan, which would go on to populate the top leadership roles of two large regional banks, Commerce and UMB. And that lineage continues to exert its influence in regional banking into what is now a seventh generation, with the elevation of John Woods Kemper to the rank of president at Commerce Bank in St. Louis.

But the patriarch himself was part of a larger family, one that traces its banking roots to very nearly the founding of Kansas City itself.  And that family was created when his son, James Madison Kemper Sr., married the granddaughter of the man who purchased what would become today’s Commerce Bank, back in 1881: William Stone Woods. And from Woods came not two, but three of the largest banks operating in the Kansas City region today. We’ll fill out that family tree below, but first, it’s worth pondering where this region is as a market today.

Official records are hard to come by, but you can distill some of that banking genealogy through various works like “Men Who Are Making Kansas City,” a 1902 collection of profiles written by George Creel & John Slavens, and “Kansas City, Missouri: Its History and Its People, 1808-1908” by Carrie Westlake Whitney. They paint a picture of a frothy, budding city where untold numbers of banks formed, grew, overextended themselves and withered. Some simply folded up operations, some merged into other entities that weren’t long for this world themselves. In their wake are long-lost institutional names like Northrup & Chick Bank, Mechanics Bank, the German Savings Association, Armour Brothers Banking Co., Missouri Valley Bank and many more.

They were the creations of entrepreneurially minded capitalists who saw opportunities in a rapidly growing city and in a nation starting to realize its full geographic potential. Some were deep into the financing of railroads, some went heavy in a fledgling cattle and meatpacking market, some were trying to capitalize on the construction booms that drove the city’s population ever-upward in burst times that followed the Civil War years and recoveries after the financial panics of 1873 and 1893.

Some endured for the long haul, and they set a standard for banking practices that competitors have embraced—or shunned at their own peril. And others, responding to more recent historical trends, have come to establish strong presences in this market in the last half-century or so, including, national giants like today’s Bank of America and U.S. Bank and regional heavyweights like Bank of Oklahoma (parent of Bank of Kansas City), Central Bank of Jefferson City, Boston based NBH Holdings, Wichita’s Intrust Bank, Arvest Bank of Arkansas and Springfield-based Great Southern Bank.

There’s even been an infusion of smaller banks, especially in recent years, as a low-interest-rate environment and declining populations in rural areas have prompted rural institutions to follow the guidance of notorious bank-withdrawal expert Willie Sutton, and go where the money is: To the more heavily populated Kansas City metro area.

Paging Dr. Irony: The professionalism—and professional courtesy—of Kansas City banking executives was on full display when former U.S. Rep. Barney Frank showed up in Kansas City in 2010 to recognize Commerce Bank and UMB for their outstanding fiscal practices. He was, after all, co-author of the bill that community banks roundly criticize for burdening them with huge regulatory costs. From left: Mariner Kemper and Mike Hagedorn of UMB, Jonathan Kemper of Commerce, UMB’s Peter de Silva, and Rep. Barney Frank.

The Woods-Kemper Influence
Kansas City’s story, historians tell us, really begins with the opening of the Hannibal Bridge in 1869. But four years before that momentous event, one Francis Reid Long and partners opened the Kansas City Savings Association, a seed that sprouted into today’s Commerce Bank.

The green thumb who tended that process was William Stone Woods. Born in 1840 in Columbia, Mo., young William was an orphan raised by his grandparents—and that relationship may have had a great deal to do with the way he would see his own obligation to members of his family as an adult. But he didn’t become a banker right away; before he was a businessman, he was a physician, treating patients in Monroe County for $1.50 each, according to a biography penned by Gary Kremer, a former history professor at what is now William Woods University in Fulton, Mo.
“He apparently gave up the practice of medicine after 1866,” Kremer writes, in favor of a general merchandising business in Paris, Mo., then a traveling wholesale grocery business serving workers building the Union Pacific Railroad. Profits from that went into creation of the Rocheport Savings Bank in 1869—the year Kansas City won the Manifest Destiny Lottery with construction of the Missouri River bridge.

In 1881, a very prosperous William Woods moved to Kansas City and acquired the savings association, reorganizing it into the Bank of Commerce the next year, then setting his sights on Kansas. Under his wing: Charles Quarles Chandler II, an orphaned nephew whom Woods raised from around age 10. They established a line of banks throughout southeast and south central Kansas, then as far southwest as New Mexico. In 1900, Woods and Chandler  bought the Kansas National Bank in Wichita, soon to become First National Bank.

And First National eventually became the Intrust Bank we know today. With $4.2 billion in assets, it’s the largest locally owned bank in Kansas’ largest city, and is led by Charles Q. Chandler IV, the fourth generation of the banking family.

So multi-generation ownership wasn’t a new concept for Dr. Woods. Family ties would also come into play when he met an up-and-coming businessman by the name of William Thornton Kemper. A native of St. Joseph who had become a successful dry-goods wholesaler in Valley Falls, Kan., young Kemper first caught the eye of local banker Rufus Crosby, and at 21 years old, became the assistant cashier at his bank.

The goods-dealer-turned banker caught more than Crosby’s eye: He made his boss his father-in law by marrying Charlotte Crosby in 1890. After moving to Kansas City and dabbling in grain trading, he crossed paths with William Woods, who offered Kemper a job at his bank, by then one of the largest in the country because of its designation as a national clearinghouse bank.

They would go on to develop more than a professional relationship: In 1917, Kemper’s son, James, married Gladys Woods Rubey, William Woods’ granddaughter. The story takes on almost biblical overtones at that point: William T. Kemper begat James Madison Kemper, who would populate the Commerce Bank line, and Rufus Crosby Kemper, who would do likewise with United Missouri Bank.

James Madison Kemper’s line produced James Jr., then David and Jonathan Kemper, leaders of Commerce Bank today from their posts in St. Louis and Kansas City, and David’s son, John Woods Kemper, became president in St. Louis last year—the sixth generation of his family in a leadership role. At City Center/UMB, meanwhile, Crosby Kemper Sr. handed the reins to R. Crosby Kemper Jr., who would produce a line of sons that would serve in leadership roles at UMB for years: Crosby Kemper III, Alexander Kemper, and Mariner Kemper, the chairman of UMB Financial Corp. today.

Throughout their growth, the two banks have jostled for the right to claim the title of Kansas City’s biggest hometown bank. As second- and third-cousins, the Kempers involved today aren’t as close as their grandfathers might have been, even with the sibling rivalry inspired by William Thornton Kemper. One thing both banks do share, however, is a history grounded in solid, conservative banking principals and lending practices that have made them respected in national banking circles.

Commerce Bank, for example, has been an annual fixture on Forbes’ list of best banks for five straight years, and in 2010, the two banks were No. 1 and No. 2 among U.S. mainland banks on that list. What has the family dynamic contributed to the standard for stable banking in Kansas City?
“I think that’s a better question to ask one of our customers,” says Jonathan Kemper. “People point to the long-term orientation and the fact that we’re dependable; they know that if an individual has an issue, he can find a decision-maker. That doesn’t have to do with long-term family ownership as much as what makes a long-term business relationship.”

From a personal standpoint, Kemper said, “I don’t think it means that much to go back six generations.” What does matter, he said, is that with the seventh generation involved through his nephew, John Woods Kemper, “the president of the company is continuing a tradition based on the same banking values.”

But there’s no denying the role that family played in those two anchor institutions of the local market.

“Ultimately, UMB is a story about a family, a region, a way of life, a tradition,” said Carol Sturm, vice president, corporate art curator and corporate archivist for UMB. “In 2000, Crosby Kemper Jr. celebrated 50 years in banking. … Through his character and integrity, the underlying philosophy of the company remains constant—a banking tradition based on trust and relationships.”

Other Family Ties
Of course, the Woods-Kemper-Chandler line isn’t the only legacy family operating in Kansas City banking circles. Nearly 60 years ago, Byron Thompson opened the Ward Parkway Bank, rebranding a decade later as Country Club Bank. Today, with more than $1.2 billion in assets, it’s one of the region’s biggest locally based banks, and is led by Thompson’s son, Paul, as the CEO, with other members of the family in key roles.
In Topeka, the Dicus family name has been a fixture on office doors of Capitol Federal Financial for nearly 60 years. That started with John C. Dicus, who joined the company in 1959 and eventually rose to the roles of chairman and CEO before retiring in 2009. He turned the reins over to his son, John B., who continues to lead the region’s third-largest financial institution, with more than $9 billion in assets.

And the Dickinson family, whose late patriarch, Gary Dickinson, died in 1997, after having built the Bank Midwest brand from a small enterprise in Chillicothe into what would become one of the region’s biggest banking names. A strategic withdrawal from traditional commercial banking in 2011 led to the sale of the Bank Midwest assets to NBH, but Dickinson continues today as owner of the Armed Forces Bank, serving the military, and institutions in Florida, Colorado and Arizona with a combined $2 billion in assets.

As those prominent families were growing their banks—and the numbers of their branches—during the second half of the 20th century, one can cruise the records of the Federal Deposit Insurance Corp. and literally see the development of a metro area itself in the founding of community banks that popped up in the Kansas suburbs, southern and eastern Jackson County and across the Northland.

In most cases, they were true community banks, as CEO Brent Giles noted in the factors that have driven growth and market share for BankLiberty, founded in 1955.

“My board is made up of Northlanders, and we have a true affinity for our community and the growth in this area,” Giles said. “They really believed in it, made a lot of loans to develop subdivisions and build houses and retail. It’s a strong area, we know it well, and that’s why we’re able to avoid many of the problems that banks went through in the recession: We loaned to people in our community who we knew, and on things we understood.”

That has contributed to the strength that has pushed assets at BankLiberty past the half-billion-dollar mark and kept it highly competitive with larger banking companies that dominate much of this marketplace. North of the Missouri River, Giles says, BankLiberty is consistently in the top two or three market-share positions, jostling with far larger concerns like Commerce Bank and Bank of America.

Bob Monroe, a veteran financial-services lawyer with Stinson Leonard Street, traced much of what we see in banking ownership patterns today to legendary postwar figures like the late Frank Morgan and his uncle, Sherman Dreiseszun, along with the late Bill Nelson of Boatmen’s and NationsBank. Their names are fixed in banking memories as legends who promoted growth and, at times, had to navigate choppy waters.
“We saw a lot of the community banks get swallowed up” in the 1980s and 1990s, Monroe recalls. “We had our share of failures during that time, but in general, it’s been a banking community run by conservative, caring community-oriented leaders.”

And that caring piece, which exhibited itself in some high-profile philanthropic and civic initiatives, was and remains hugely important, area executives say.

Crosby Kemper Jr., for example, was famed for stepping in to personally underwrite a faltering Kansas City Philharmonic in 1982. He was equally instrumental in creating the Kemper Museum of Modern Art, a gift to the region that expressed a longstanding family appreciation for artistic expression.

“I can’t say enough about the contributions of people like the Kempers, and Bob Regnier and Bill Nelson have made to philanthropy in Kansas City,” said Deb Wilkerson, president and CEO of the Greater Kansas City Community Foundation. The region’s national reputation as a philanthropic community, Wilkerson said, is owed in large part to the contributions of banking executives, and not just for the dollars involved. Banks continue to invest the talents of their executive staff by populating non-profit boards across a wide range of charitable causes.

Jack Ovel, a banking veteran in this market who now leads Kansas City operations for North Carolina-based Bank of America, said the civic contributions of bankers couldn’t be overstated. His own company, for instance, has 40 banking centers and 810 employees in the region, many of whom serve on boards, or otherwise support and volunteer their time for nonprofit organizations like Kansas City LISC, the United Way, Habitat for Humanity and Harvesters-The Community Food Network.

It’s part of an approach to banking that is as fundamental as making sound loans.

“Banking has evolved from where it was 100 years ago for a lot of reasons,” Ovel said, “but one of the original tenets still has lot of merit: Make sure you’re lending to businesses where you can go kick the tires, and where you know the owners and you can get a good sense of who’s running the business. Stay in markets you’re comfortable with: With banks that strayed and made loans in markets across the country that they didn’t have much knowledge about, some results have brought people back home, so to speak.”

History Still in the Making
With more than 135 banking organizations operating in the Kansas City MSA, commercial and individual clients have far more banking options than do residents of comparably sized cities in the Midwest. And yet, outside banks continue to seek toeholds in the market. Even at the precipice of recession in 2007, banking executives saw opportunities.

Adams Dairy Bank launched that year, and is now up to $94 million in assets—a level that, until recent years, defined the upper range of what constitutes a community bank. Now, CEO David Chinnery says his bank is looking to reach the $150 million level, generating volumes and margins that can keep up with increasing costs, particularly from regulation.

Another 2007 startup, CrossFirst Bank, has pursued a different strategy in roaring to the $1 billion level in assets, and CEO Mike Maddox says they’re on the doorstep of $1.2 billion. “It’s kind of a snowball that gets bigger and bigger,” he says.

Their example demonstrates that the future of banking isn’t just grounded in its past; new opportunities will continue to emerge for those with the vision to pursue new models.

“We just wanted to offer something that’s a little different. We are focused on a niche customer base, very focused on private banking and commercial banking, and we wanted to be able to delivery service quickly and efficiently,” Maddox said. “Some of the bigger banks get bogged down in bureaucracy, so if we could streamline that and really know our customers, we felt like there was a market need for that.”

By wedding that vision to a model that shuns a branch office network that can drag down operational efficiencies, CrossFirst has been able to aggressively pursue growth and acquisitions, adding to that snowball.

“We’re really focused on hiring fewer, better people, very experienced talent,” Maddox said. “We have world-class technology, and the combination of those two allows us to deliver great service and products to our customers without having to spend a lot of money on a bunch of branches.”

So look for more of the same with area banks, as CEOs of larger institutions anticipate a coming wave of consolidations. Aging Baby Boomers in ownership positions at smaller banks, the relatively higher burden of compliance costs for those institutions, and a persistent low-interest environment that has hammered their earnings potential all fore-tell a number of mergers and acquisitions on the horizon.

An Enduring Standard
William Thornton Kemper died in January 1938 at the age of 72. According to Sturm, the UMB archivist, his billfold contained a yellowed clipping that had reached him years earlier. It read: “The final test of a gentleman … is his respect for those who can be no possible service to him.”

No name was affixed to the note, but the person who sent it inscribed: “You are doing it.” That Kemper would carry it with him to his dying day tells us a lot about the values that helped shaped banking in the Kansas City region—values we still set at work in a thriving, 21st century banking marketplace.