Phelps County Bank expands to downtown

When the Ozarks Regional YMCA listed its 62,000-square-foot downtown building for sale in June 2022, the possibilities were wide open for the 1913 brick-and-stone structure.

Among them were the chance it might be torn down for reuse as apartments, like the YWCA building across the street from it, demolished in 2018.

Few would have predicted a bank would purchase the building at 417 S. Jefferson Ave.

The successful bidder in the private auction conducted by Zamora Real Estate was Rolla-based Phelps County Bank, which paid $2.05 million plus $102,000 in fees, closing on the sale May 1. The building was listed for sale nearly a year earlier for $4.5 million.

It’s a page from the bank’s Rolla playbook, where it occupies a former hotel that is listed on the National Register of Historic Places, and where Marilyn Monroe once spent the night.

“We all say our office was Marilyn’s room,” said Linda Goff, the bank’s vice president of marketing.

CEO Dominic DeLuca said the new bank branch in Springfield will serve individuals and businesses.

“Checking accounts and auto loans, real estate loans, your small-business real estate loans – you know, this kind of simple banking, for lack of a better term,” he said.

The bank is zeroing in on a temporary location to open right away, and the search for new employee-owners will begin soon, with the Jefferson Avenue building to open in 2025. DeLuca called the timeline “aggressive but reasonable.”

About half of the building – 30,000 square feet of additions built onto the back of it, mostly in the 1970s, and not original to the 1913 structure – will be torn down to restore the building to its original footprint.

“This will be our new lobby,” said Goff, stepping onto the basketball court located just past the YMCA’s reception area.

Another set of courts beyond that will be torn down, and Goff pointed out the internal wall separating them will become the exterior wall of the building once again.

Goff said customers will enter the building on the west side, currently the rear of the building, though the current front doors facing Jefferson Avenue with their arched window will be restored to their original appearance. In the space created by demolition, there will be 15-20 customer parking spots nearby, with another 40 or so spaces for employee parking, Goff said. The building has 52 spaces now, according to its real estate listing.

DeLuca estimated renovations will cost upwards of $4 million.

The basketball court is a huge space for a lobby, and old photos show it housing everything from fitness instruction to crowded banquets. Originally, a walking track circled the room overhead.

The YMCA made the decision to close and sell its downtown building because of declining membership and increasing maintenance costs, according to past Springfield Business Journal reporting.

The building, which has always housed the Y, is in for quite a transition.

A different model
Phelps County Bank is one of a small number of banks in the country that is fully employee-owned through an employee stock ownership plan, DeLuca said, estimating there are only four or five.

The bank is already working on hiring its Springfield staff. When asked how many it would bring on, DeLuca said, “We want to get one, and then we want to make that two, and then it’s finding those first five to 10.”

He said he was committed to hiring as many people as he could justify and to filling the building as soon as possible. As noted, plans call for 40 employee parking spots.

“What we’re really trying to grow is our ESOP,” he said. “There’s just a handful of 100% ESOP-owned community banks in the country, and it’s a hard number because it’s not a reported number, but we think that ownership type benefits any and all communities.”

The publication Wisconsin Banker backs up DeLuca’s claim, noting 800 banks nationally offer ESOPs, but most control small blocks of stock, and few bank ESOPs own more than a quarter of an institution. Only a tiny fraction has 100% employee ownership.

“For us, any profits that we have are retained by the people that are working with you face to face every day,” DeLuca said. “That has a snowball effect in a community, and it really drives value, as those people not only work here, but every dollar they make gets reinvested in the community.”

The 60-year-old bank has 93 employees among its four branches, according to Federal Deposit Insurance Corp. data. The name Phelps County Bank will stay, even with the expansion into Springfield, and all employees will wear the same light blue shirts bearing the bank logo. Goff said all bank associates have business cards with only their name – no titles.

“Every person you are going to interact with in the bank is the owner of the bank,” DeLuca said. “It’s a great form of ownership, and Springfield’s got a pretty solid base of ESOP awareness in the market.”

Goff said employer-owners were kept in the loop through constant, town hall-style communication, but they did not vote on the purchase.

Local banking landscape
The planned Queen City branch of Phelps County Bank will enter a market that has 180 bank branches among 36 banking institutions in the Springfield metropolitan statistical area, according to FDIC data.

FDIC figures from June 2022, the latest data available, show that within the Springfield MSA comprising Greene, Christian, Webster, Polk and Dallas counties, $15.9 billion is on deposit, reflecting a growth rate of 4% compared with the prior year. Springfield MSA deposits have nearly doubled in the past decade, with a June 2012 FDIC report showing $7.9 billion in the market.

Phelps County Bank holds $458 million in deposits among its locations in Rolla and St. James, according to FDIC data from last June.

When asked if he saw an untapped market in Springfield, DeLuca said no.

“The way that we approach our business is better. It’s a competitive advantage, and we have competitive instincts,” he said. “When you come to know how we bank and the products that we offer, we think there are some advantages, but what we’re really trying to grow is our ESOP.”

DeLuca said the employee owners are eager to get downtown.

“There’s been a ton of hard work, effort and money invested in the downtown revitalization,” he said. “It’s exciting to see that. We love seeing some of these old buildings that have been repurposed.”

He noted the Hotel Vandivort is a particular inspiration for the bank as it looks toward redoing the Y building and restoring some of its original design elements, like natural woodwork and terrazzo floors.

“In the downtown already, everybody that’s reached out to us has been very welcoming and is excited to see progress,” DeLuca said.

The bank has an opportunity to be welcoming in return. DeLuca said it will allow the YMCA to hold daily youth programming in the building this summer for some 150 children per week for 10 weeks.

Room for one more
Rusty Worley, executive director of the Downtown Springfield Association, predicted the downtown location will benefit Phelps County Bank.

“So many services are offered online, but in addition to the digital side, there’s the relationship side – wanting to have connections with the community,” he said. “That’s something downtown is very strong at.”

According to Worley, visibility is important, and the downtown location helps to keep the bank top of mind when people are looking at options.

“You want to have a strong presence, and the YMCA building definitely has that history and that strong facade there on Jefferson,” he said.

He noted the city’s comprehensive plan, Forward SGF, calls the block where the Y building is located a catalyst site.

“In addition to what they’re planning for the historic building, they or other partners could look at mixed use and bring density to that area,” Worley said. “With a few strategic additions, there’s a lot of possibilities on what could be built out.”

Phelps County Bank joins a downtown banking landscape that includes Systematic Savings Bank and Great Southern Bank, both celebrating their centennials this year, as well as U.S. Bank, Metro Credit Union and a new branch of Arvest Bank in Brewery District Flats.

Jason England, Springfield region president of Arvest Bank, said the bank was eager to get downtown.

“It’s an area that was a visible hole in the market for us,” he said.

The branch will offer relationship banking, according to England, with customers being met at the door by an associate who will guide them to an office to take care of whatever the customer has come in for, from cashing a check to applying for a mortgage. It’s a new model that is well suited to the downtown location, he said – and on the morning of its ribbon-cutting, 11 customers came to do business before 10 a.m.

“There was a need,” he said. “We felt that was pretty telling.”

England said the opening of the Phelps County Bank branch is a good sign for the market.

“It shows the strength of Springfield that other banks want to be located here,” he said. “That shows resounding approval for what we’re doing in Springfield.”