A ‘Capital’ Investment: Legacy Bank creates new division while expanding footprint out of state

Legacy Bank & Trust Co. officials say a nearly two-year process to launch a division within the affordable housing finance market came to fruition at the start of the year with the purchase of Dallas-based Crain Mortgage Group LLC.

The Springfield bank and its holding company, Ozark Heritage Financial Group Inc., closed on the acquisition Jan. 1 for undisclosed terms. With the deal’s closure, Legacy Capital became the rebranded name for Crain Mortgage Group. Legacy Bank President Brett Magers is retaining his position while also becoming CEO of the new division. He’s joined in the C-suite by Kylee Brown, who is now Legacy Capital’s president. Brown also is vice president and director of strategic initiatives for the bank, a post that she’ll eventually exit.

“I’m phasing out of that to work in the capital company,” Brown said.

Magers said that transition could take a while, noting she wears a lot of hats at the bank.

“She’s worked harder than any other banker I’ve ever been around,” he said of Brown, who has 11 years of banking experience, including five years at Legacy Bank. “It’ll probably be a couple of people taking over her stuff at the bank over the next couple of years.”

The new division occupies three offices in Legacy Bank’s $8 million, 40,000-square-foot headquarters on West Sunshine Street, Brown said, noting she and Magers are two of the 10 employees for Legacy Capital. The company continues to operate a Dallas location, where six employees work, as well as an office that employs one in Westport, Connecticut.

“We’ve kept the entirety of the staff in place and gave them all contracts and hope they stay for the long run,” Magers said, noting it took over 18 months to negotiate and close the deal for the business.

New market
Crain Mortgage Group is a provider of secondary market Federal Housing Administration and U.S. Department of Housing and Urban Development multifamily loans. Since its 2007 start, Crain has originated about $750 million in HUD loans and currently services nearly $250 million in mortgages, according to Magers.

Danny Crain, the company’s owner and president for the past 15 years, is now the chief underwriter for Legacy Capital, Magers said.

Magers said obtaining a servicing license, which allows companies to secure titles to loans and sell them on the secondary market, requires the business to be a Multifamily Accelerated Processing-approved lender. Doing so is a difficult task, he said, adding Legacy Bank chose to explore buying a company that already had a license. MAP is HUD’s loan application processing system that speeds up approval times for HUD and FHA multifamily loans, according to the federal government agency. On HUD’s website, Missouri had only two MAP-approved lenders as of late December, with Legacy Capital listed under the address of its Dallas office.

“There’s a list of approved MAP lenders and we just started calling the smallest originators across the country, and the Crains were one of the first ones to return our phone call,” Brown said. “I don’t really believe in fate, but it was good timing.”

Magers agreed.

“They were about in the place where they were going to hire a business brokerage to try and sell their company,” he said. “It was just happenstance that it was also a place we were looking to expand our banking operations.”

The Dallas Morning News noted in November that Dallas-Fort Worth was leading the country in apartment building last year, with 25,000 new rental units scheduled to open in 2022. Magers dubbed Dallas “the apartment development mecca of the world right now.”

“Dallas was all over our radar as the best place to bank in the country,” he said, noting Legacy Bank is eyeing real estate to build and remodel bank branches there, declining to disclose additional details. “Their deposit base increased by $85 billion last year. There’s a lot of deposits to capture down there. It’s a very pro-business state to work in. They kind of accept outsiders with open arms, which is not necessarily the case for all large cities.”

Into Oklahoma
While the bank established itself in two new states with the acquisition of Crain Mortgage Group, it’s not the first out-of-state activity for the financial institution, which first opened in Plato in 1907. It debuted in Tulsa, Oklahoma, at the start of 2022 with a loan production office, which was expanded into a full-service branch last May, according to past Springfield Business Journal reporting.

Investment in the Tulsa market continued this month, as Legacy Bank grew its footprint in the Sooner State with the addition of office and branch space in a newly constructed building. Katrina Sweaney, the company’s senior vice president and director of human resources, told SBJ it leased 14,000 square feet in a roughly 260,000-square-foot property for undisclosed terms. The bank occupies the third floor of the building for corporate offices as well as 3,000 square feet on the first floor for a full-service branch, according to officials. It marks the sixth branch for the bank.

Legacy Bank moved up six spots last year to No. 7 on the Federal Deposit Insurance Corp.’s annual deposit market share report for the Springfield metro area – reaching $690.1 million in local deposits and a market share of 4.54%, according to past reporting. Still, Magers said “it’s heavy, heavy competition in the Ozarks for banking.”

In Tulsa, he said the bank found its deposit rates don’t have to be as high to capture a larger market share.

“It’s just less competitive, but it’s a $40 billion deposit market, which is almost three and a half times the size of Springfield,” he said, adding the bank also has long-term plans to build another branch in south Tulsa. “It was just an opportunity thing, and we met some great bankers down there. We always kind of go where opportunity lies based on the people we find.”

As for Legacy Capital, Magers said the division could grow to as many as 10 employees in Springfield by the end of the year. The short-term goal is to ramp up production, Brown said.

“The Crains historically had closed a couple loans a year. We already have a really strong pipeline, close to a $1 billion that we’re underwriting,” she said, adding officials want to bring in more in-house loan servicing and continue to work with developers nationwide.

However, Magers said no additional announcements of market growth for the bank or Legacy Capital should be expected this year.

“We’re going to try and digest the growth that we have in front of us in those markets, which we think we’ll carry us for a long time,” he said. “There’s a lot of opportunities
there.”

Digital Editor Geoff Pickle contributed.