A Sage for Community Banking

Missouri independent bankers exec retires after 40 years in industry trenches.Jerry Sage, the retiring executive of the Missouri Independent Bankers Association, has battled to keep community banks open for business for the last 40 years. The responsibility could not have fallen on more prepared shoulders. Before Jerry Sage became the defender of independent banking in Missouri, he gained a tenacity for a different kind of adventure: hunting for the lost treasure of Valverde in the Amazon jungle and on the slopes of the Andes Mountains of Ecuador..The Valverde treasure is named after a Spanish soldier. Legend says that Valverde was ostracized by his countrymen because of his Incan wife. He complained often of his poverty until one day she promised to make him rich. That night she led him by hidden trails through the mountains until they reached a glittering cavern filled with gold. Just a small portion of the wealth in the cave made Valverde immeasurably rich..At his death Valverde willed his map showing the location of the treasure to the King of Spain. Afterward, representatives of the king failed repeatedly to find the treasure. Many more treasure hunters since have failed, unable to endure the biting cold of the Andes at high altitude or to penetrate the Amazon jungle..Sage was in those mountains in 1967. His expedition had climbed to 16,000 feet above sea level. After more than 40 days in the jungle, the natives who served as his guide were getting cold feet. "According to legend, there were cannibals guarding the treasure. So, one night our guides decided they weren't going stay with us anymore," Sage said. "They got up in the middle of the night, stole our gas stoves and took off. That was the most frightening moment I ever had in the jungle.".In the cold and wet, it was difficult to build a fire. "We thought we had rice and double smoked bacon. We found what we thought was rice was actually raw peanuts," Sage said. "Luckily for us, water runs downhill and back toward civilization. The Amazon River wasn't far away. After the bacon, we ate the moss that grew at the base of the trees. It took us 12 days to get out.".Despite his close call, Sage made many more expeditions in search of the lost treasure of Valverde before he was hired as the executive director of MIBA in 1975. There were more than 600 independent community banks in the state at the time. The man who barely survived the Amazon jungle but had the grit to return to try again became responsible for the year-in year-out fight to keep the number of community banks from dropping..Becoming a lobbyist.By the time Sage became MIBA executive director, the association had been fighting to keep large banks from branching into Missouri since 1958. MIBA is the oldest state independent bankers association in the country..Sage recalled one of his first experiences as a lobbyist as somewhat comical. Gene McFadin, an attorney, was hired to lobby for MIBA. "Gene was tied up with work from his law firm, and he asked me to testify for him in a banking committee meeting. I remember him saying, 'You don't have to do anything but say the Independent Bankers of Missouri oppose the legislation'," Sage recalled. "When it came my time to speak, I got up on the dais in front of this committee and it felt like I was on trial before a tribunal. My voice was squeaky and I was embarrassed.".Despite his wobbly start, Sage soon showed himself an effective lobbyist. "When there was a statewide branch banking referendum in 1958, a bunch of us old independent bankers hired McFadin and beat it," said Bill Breedlove, a retired banker who owned a $1 million bank in Rogersville, Mo., at the time. "After that, Jerry did a great job as McFadin's assistant. I don't know anyone who could've done a better job.".In the years that followed, large banks worked to erode the laws which prevented branch expansion. As large banks began branching into towns, the state's community banks faced a dilemma.."We have a lending limit just under a $1 million," said Wes Condron, owner of the $27 million America's Community Bank, Blue Springs, Mo. "When a customer exceeds our limit, we participate with a correspondent bank or we lose the customer.".With large banks moving into their market, community banks had fewer options for correspondent partners. Any one of the large banks could move into town equipped with customer information from their correspondent business..Then in 1982, after five years of pushing, MIBA convinced the state legislature to pass a bill that gave community banks a better competitive option for sharing loans. The legislation gave banks the opportunity to own up to 5 percent of another bank's stock. That meant community banks could band together to create a "bankers' bank" to buy their loan participations. No longer would community banks have to sell their participations to large correspondent banks that ultimately competed with them..Missouri Independent Bank.If MIBA was going to organize a bankers' bank, the venture needed broad support from independent bankers. MIBA commissioned a feasibility study and began organizing meetings of community bank CEOs across the state. "Jerry was instrumental in getting the study done, in getting the word out and in educating bankers about a bankers' bank," said Camden Fine, president and CEO of the Independent Community Bankers of America. Fine was hired to organize and charter the bank in January 1983. "The first time I met Sage was in April 1984 in Jefferson City, Mo., at an MIBA board meeting. I was being introduced as the brand new president of Missouri Independent Bank. We were just kids then.".Sage and Fine traveled the state together enlisting investors for the new bank. By mid-1984, Fine, MIBA and Sage had gathered the capital required to open the bank. Fine received the charter for Missouri Independent Bank at MIBA's annual meeting in September 1984. Fine served as the association's treasurer until he left Missouri to lead ICBA in 2004..In the years that followed, Missouri Independent, now called Midwest Independent Bank, was an important partner to community banks. For Citizens Bank of Rogersville, Mo., its partnership with Midwest Independent helped the bank maintain its relationship with customers..Citizens Bank's customers were often too small initially to be of interest to competitors but as the bank invested capital and time, the companies grew and other banks noticed. "When I became president of the bank in 1992, it was a $2 million bank," said Nancy Ruyle. "As the years progressed loan requests became larger and larger. Given our lending limit, if we were partnering with a larger bank for loan participations, we could have lost our customers to them. The bank had $65 million in assets when we sold it [in 2012]. It would have been harder to grow it to that size without MIB.".Some of the largest loans ever made by America's Community Bank were made possible through a partnership with MIB. "We have been able to make a loan for several million dollars to one customer," Condron said. "We otherwise would not have been able to service the customer and likely they would never have done business with us.".Managing the association.Over the years, Sage proved effective at killing bills in the state legislature that hurt community banks. "Just about every session and just about every year it was a battle," Fine said. "He was either blocking something bad or helping something good through. He was very successful beating back legislation that would limit or harm community banks.".Sage had strong influence with legislators, said Max Cook, president and CEO of the Missouri Bankers Association. Whether Missouri banks were fighting to remove a cap on insufficient funds fees, battling credit union over-reach or new burdensome mortgage laws, community banks had an effective advocate in Sage, Cook said. "Jerry and I have been on the same page here in the state for many years and we have worked jointly on issues for years as well," he said. "The lobbying business is one of building relationships. Jerry was one to have influential and meaningful relationships that can gain success. When Jerry walks into a room with elected officials, they like him. He has a kind of magnetism."."Sage has one of strongest community banking associations in the country," Fine said. "We have 46 state affiliate associations. We have outstanding state execs, I wish they were all like Sage. There is a reason he has done this for 40 years; we broke the mold with Jerry.".After decades of branching, Missouri still has 307 banks. Through Sage's effort, Missouri independent banks didn't lose the war on branch banking until the Dodd-Frank Act, which removed the requirement that a large bank buy a Missouri bank before branching in the state. "The credit doesn't go to me," Sage said. "It goes to the bankers who supported me. Their contribution of time and effort is what made my career possible. I am very appreciative of the opportunities community banking gave to my family over the years.".With his retirement this month, Sage plans to spend his days at his cabin on the shores of Missouri's Sac River. Now bankers will remember the man who fought to keep Missouri community banks open for business with the nickname chosen by his friends: Sage.