CrossFirst makes a timely deal, anticipating fresh demand for SBA loans


CrossFirst Bankshares’ deal to acquire Farmers & Stockmens Bank in Clayton, New Mexico, is timed to give the Kansas bank an experienced team of lenders ahead of what could be a massive spike in small-business borrowing.

CrossFirst, in Leawood, Kansas, is already a preferred Small Business Administration lender, meaning the $5.6 billion-asset company can underwrite and close loans without input from the federal agency. The bank maintains a four-person SBA team based in Kansas City, Missouri, but CEO Mike Maddox said it has lacked the capacity to serve its other major markets, including small-business hotbeds Dallas and Phoenix. Monday’s deal will do away with that limitation. 

CrossFirst expects to close its $75 million, all-cash deal for Farmers & Stockmens in the second half of 2022, allowing the combined company to capitalize on the anticipated rush to federally backed loans.

Inflation and the prospect of a recession will push more small businesses to lock in capital at the same time rising interest rates pump up returns on secondary-market loan sales, Rohit Arora, CEO of New York-based Biz2Credit said in an interview. 

“The demand for SBA loans is going up and will continue to go up in recessionary conditions because people want to be safe,” Arora said, adding that in fiscal 2023 lending volume in the agency’s flagship 7(a) program might approach the record $36.5 billion SBA guaranteed during fiscal 2021, from October 2020 through September 2021.

Mike Maddox, CrossFirst
“When we’re looking at strategic markets, one of the first things we do is try to identify the top talent,” said Mike Maddox, CEO of CrossFirst.

KYLIE CRANE

Under the 7(a) program, the SBA guarantees loans originated by private-sector lenders, including banks and credit unions. 

“Putting our existing capabilities together with what [Farmers & Stockmens] brings to the table, we believe [this deal] is a great opportunity for us to expand our SBA lending and banking opportunities throughout our other markets,” Maddox said in an interview.

Jackie Bogdan, director of SBA operations for the $567.5 million-asset Farmers & Stockmens, leads an experienced, eight-person team in Denver that has closed twice as many SBA 7(a) loans as CrossFirst through the first eight months of fiscal 2022.

After zeroing in on Denver as a target market, CrossFirst’s task shifted to recruiting a seasoned banker capable of running its operation there. “When we’re looking at strategic markets, one of the first things we do is try to identify the top talent,” Maddox said.  

Scott Page, Farmers and Stockmens Colorado CEO, served as president of the $4.4 billion-asset, Denver-based CoBiz Bank from 2014 to 2018, prior to its sale to BOK Financial in Tulsa, Oklahoma, a fact that made Page a natural candidate, Maddox said. 

“He really is the key to the whole transaction,” Maddox said of Page. “He was president of CoBiz and helped build a really great franchise in the past in Denver. We feel strongly he can help us build a strong franchise as well.” 

Page has agreed to continue with the merged company, alongside Farmers & Stockmen’s market leaders for Colorado and New Mexico and the leaders of the SBA and private banking teams. Virtually all of Farmers & Stockmens lenders and customer-facing employees will also be offered jobs. 

“Their key employees are under retention through close, and we have plans for retention incentives post-close, as well,” said Ben Clouse, CrossFirst’s chief financial officer.

CrossFirst entered Dallas in 2016 and Phoenix in 2021. It plans to take time to ensure the acquisition of Farmers & Stockmens and entry into Denver proceeds smoothly, but it is not finished expanding, Maddox said. CrossFirst is eyeing Houstin, San Antonio, Fort Worth and Austin in Texas, as well as Omaha, Nebraska, as potential new markets. 

“We still believe we have a lot of room to grow,” Maddox said. “There are other markets we’re interested in, several in Texas. We’re going to continue to be opportunistic.” 

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