A Conversation With ... Mike Lawson

In June you became the CEO of OakStar Bank. When did you first join the bank, and how did this opportunity come up?
OakStar Bank started in 2005. They brought a group of bankers together and started a bank and unfortunately, it was kind of bad timing because it wasn’t long after that that the financial crisis hit. I happened to be part of a group that was looking to do a startup bank ourselves. We called ourselves the River Group. That was really in about 2008. Frankly, our timing couldn’t have been worse with the financial crisis. We went to Jeff City to the Missouri Division of Finance and talked to them about applying for a bank charter. While they didn’t laugh out loud, we could tell that there was really no way we were ever going to get that charter. We came home kind of with our tails between our legs and saying, “What do we do?” OakStar was an opportunity for us. A discussion was started in regard to our group investing in OakStar, and a change of control, as they define it, occurred in February 2009. We took control of the bank, a majority interest. We were about a $100 million bank at that point. They had not made any money yet. We were able to invest a significant amount of additional capital. We knew we had to be about $200 million or so to get to profitability, and we did that in short order. We attracted some really talented bankers. We had really supportive stockholders. Our original strategic plan really was to try to grow to about $500 million in a single location. Then an acquisition opportunity presented itself. So, we bought the Bank of Urbana, which helped with our deposit growth. From there to today, we’ve had four acquisitions and a significant amount of organic growth. We’ve grown into some additional markets including Kansas City. We’ve grown into Colorado. Today, we’ve got 26 full-service (branches) in three states, just over $2.8 billion in total assets. Very dramatic growth curve for a community bank, but we really retain our roots in community banking. I started as the chief lending officer of the bank and was appointed as a director shortly after we did the change of control. I’ve been a banker for 37 years. It was a natural transition from that perspective when Randy [Johnson] chose to retire.

SBJ published a list in August of the largest SBA lenders to the Springfield metro, and OakStar ranked at the top of that with $32 million in loans last year. What’s behind that focus of SBA lending?
Back in the financial crisis, one of the ways that we worked out of our troubles at that time was to use the SBA program. In 2009, I believe, the SBA came out with a 90% guarantee on all SBA loans with no fees. The idea was to restimulate the economy. We really used that program to help us and help our customers get through some really difficult times. We’ve just continued to focus on the SBA activity. We’ve got some team members in the bank that are highly trained in that program, very focused on the program. It fits us as a community bank trying to work in the communities we serve to help small business to grow.

The Federal Reserve cut the federal funds rate last month, the first cut in four years. Inflation is cooling. How is that impacting your customers in terms of deposits or their interest in taking out more capital?
We have seen a shift in the deposit base in our markets. People were used to not really receiving any interest on their deposits, and then suddenly with the rapid rise in interest rates that occurred in concert with inflation, people suddenly were getting paid for their deposits. I think there’s some concern in our customers right now about how fast these rates will drop and how can I lock in some longer-term CD rates? The days of zero interest on bank deposits may be behind us. That could be good for the consumer. We try to manage our balance sheet in such a way that whether rates go down or go up, we stay fairly neutral in our positioning. As far as the borrowing side, the small-business community was probably impacted as much as anyone on rising rates because most of that small-business credit is a variable-rate loan product. A lot of our small businesses, their costs went up considerably. A lot of businesses rely on borrowings in order to fund their growth and their cash cycle, and those rates being higher added to their cost. If we are able to negotiate and navigate the soft landing that you hear the Fed talk about, I think we’ll be in good shape. We’re watching unemployment pretty closely; that seems to impact us as a community bank probably as much as any other statistic. If that’ll sort of moderate and allow us to settle into the soft landing, rates do drop a little further. We’re seeing some increased volume in mortgages. That kind of dropped off a cliff when rates started going up really quick and nobody wanted to sell their house where they had their 3% fixed rate 30-year mortgage, which just makes a lot of sense.

SBJ published a list in September looking at the Home Mortgage Disclosure Act database. Area banks saw huge decreases in mortgage volume. OakStar from 2022 to ’23 had a 56% decrease in volume. Now that mortgage rates are around 6.5%, are you waiting for the market to respond, or do you have a strategy around trying to reclaim some of that volume?
We will redouble our efforts in the mortgage area as these rates have declined and stabilized. We have traditionally had a strong mortgage division, but it is a highly cyclical business. We just had a run of about a decade there where interest rates were very low and mortgage origination was very strong, and obviously that came to a crashing halt for most banks. I do believe that as you see these things improving, you will see OakStar’s product mix getting better as well as our volumes improving. One thing that we have an opportunity to do that we haven’t taken much advantage of yet is to expand our mortgage offers and opportunities in our other markets.

What major goals do you have for this role you’ve just taken on?
One of my primary goals is to ultimately get myself to the position where I’m in effect obsolete, that I’m not needed in the organization, certainly not on a day-to-day basis. Having come out of the role as the chief lending officer and managing the risk side on the lending activity, which is our largest asset by far, it’s hard to let go of some of those things, of really being down in the weeds. But we’re very lucky in this institution in the sense that we have a very talented team here at the bank and relatively young compared to our peers. One of the challenges that I hear a lot of my peers talking about is management succession and the people that can take the bank to the next level. I believe we have those people in the bank today and we’ve identified who they are. My job is to remove the barriers and to assist those people to achieve our goals.