Hello, this is Kelly Coughlin, CEO and Program of BankBosun. Oysters open completely when the moon is full and when the crab sees one, it throws a piece of stone or seaweed into it and the oyster cannot close again so that it serves the crab for meat. Such is the fate of him, who opens his mouth too much and thereby puts himself at the mercy of the listener.

 

Announcer:

Kelly Coughlin, is CEO of BankBosun, a management consulting firm helping banks C-level offices, navigate risks, and discover reward. He’s the host of the syndicated audio podcast bankbosun.com.  Kelly brings over 25 years of experience with companies like PWC, Lloyd’s Bank, and Merrill Lynch.  On the podcast Kelly interviews key executives in the banking ecosystem to provide bank C-suite offices risk management, technology, and investment ideas and solutions to help them navigate risks and discovery reward.  And now your host, Kelly Coughlin. 

 

Kelly Coughlin:

This podcast is a continuation of a series of interviews of key executives from community and regional banks throughout the US. Community banks play a key and critical role in ensuring that a community has a healthy social and economic ecosystem. This podcast series is being produced to help celebrate and encourage community banking throughout the US.

 

I grew up in the great state of Kansas. My great-grandfather ran a coal mine in Osage, Kansas and was one of the first employers of former slaves who moved to Kansas after emancipation. So, even though I spent most of my adult years out of Kansas, I raised my four daughters in Minnesota, I have a fondness for the state of Kansas.

 

In addition to Business, County and Finance, I studied the classics in college; Greek and Roman history and the language the Roman’s spoke, Latin. I always had an infinity for Latin, even in high school. And, I think it might have something to do with coming from Kansas. No, we didn’t speak Latin in Kansas, but our state motto is a great Latin phrase that in my mind captures the real spirit of the Midwest and perhaps all of us living in America. Facing adversity, challenge and the opportunity that doesn’t come easy, but through hard work. The motto is: Ad astra per aspera ? To the stars with adversity.

 

I remember hearing this motto as a very young kid. This motto has always stuck with me and in many ways, has defined me. So, what does this have to do with this podcast? Well, my guest today is the CEO of a bank located in the heart of Kansas, actually about two hours from the dead center of the Country, with a Latin name that comes from the state motto. I’m taking to Kyle Campbell, CEO of Astra Bank in Abilene, Kansas. Kyle, did get all of that right?

 

Kyle Campbell:

You did, and thanks for having me.

 

Kelly Coughlin:

So, let’s talk about the bank name. Does it come from the State motto, or was that just coincidental?

 

Kyle Campbell:

Well, it does from the state motto and you’re exactly correct in the background on that. Where that came from is where our charter located, we’re actuallyabout ten miles south of the Kansas/Nebraska border. And, while there are a lot of similarities that mid-western residents share, they’re also intensely loyal to the state in which they reside. So, we knew any sort of name that was blatantly attributable to the state of Kansas may not be well-received if we ever had an expansion opportunity in Nebraska. So, we looked at the state motto, which you talked about, and thought that Astra Bank would be a great nod to being a Kansas chartered bank. But also, would not preclude us from having opportunity to go into the state of Nebraska, which turned out to be a great move because we actually had an opportunity to move into the state of Nebraska and we do have a location there.

 

Kelly Coughlin:

Excellent. Tell me a little bit more about the founders, early history, etc.

 

Kyle Campbell:

Well, the interesting part about Astra Bank is that we actually started in a community that we no longer serve. It started as Peoples State Bank in Courtland, Kansas, in north central Kansas. And the integration of my family into that, was my grandfather went to work for Peoples State Bank which was chartered in 1911. He went to work for them shortly after that and he started work in May of 1929. As a student of history, you know he picked a great time to enter banking. As he puts it, he made it in time just for the big bank holiday that happened later in 1929. That really influenced a lot of his early views on banking. What came out of that was, throughout Kansas and a lot of the country there were a lot of bank failures that happened in 1929, and one of the neighboring communities was left without a bank. But the two banks that were in Courtland, Kansas both survived the great depression and what happened in 1929.

 

So, the city father of Scandia, Kansas, which was a community just seven miles to the east of Courtland, Kansas came over and a made a pitch to both banks trying to get one of the two of them to move over to Scandia. Well, Peoples State Bank decided they would move and they moved in 1939 to Scandia and renamed them Scandia State Bank. We’ve grown from there, through that point in time. My grandfather, over the course of the 50s, 60s and early 70s, gradually came to acquire ownership of the Scandia State Bank. My father, my grandfather’s son-in-law went to work in the bank in the 1970s and started there and is still active in our bank today.

And then, we’ve grown by acquisition, we acquired a bank in Belleville, Kansas which was ten miles to the east of Scandia. And then we’ve grown by acquisitions since then and we now have locations from central Kansas, north central Kansas, all the way up into south central Nebraska and now have eight locations overall.

 

Kelly Coughlin:

And you are running the show?

 

Kyle Campbell:

I am running the show.

 

Kelly Coughlin:

So, your grandfather passed and your father is still involved?

 

Kyle Campbell:

My father is still involved and still comes in on a regular basis. One of the things that he enjoys working with, is he enjoys managing a securities portfolio, which in this rate environment, trying to find somebody who enjoys that is a challenge. So, if I’ve got somebody who’s got an interest in it and enjoys doing that, it’s a good fit for us.

 

Kelly Coughlin:

Let’s talk about your background. You grew up in the Midwest where you’re raising your family?

 

Kyle Campbell:

I was raised in Scandia, Kansas. So, I spent most of my life actually living in a house in Scandia right next to the bank, so it was a really short commute for my dad. He just essentially walked next door and was at work. I grew up and had what I call a delayed childhood rebellion. In college, I decided I was going to major in Engineering and made the statement that I was never going to work in the family bank. You can see how well that proclamation worked for me.

 

Kelly Coughlin:

You went to school in Kansas? Did you say K State, is that where you went?

 

Kyle Campbell:

Yes, I went to school at Kansas State and majored in Chemical Engineering. After K State, then I went to Kansas City and I worked for Procter and Gamble and their manufacturing plant there for five and a half years as a Process and Project Engineer for them. And then, at that point in time, had some opportunities that came available to me in the company, took advantage of those and used it to get my MBA through Rockhurst University in Kansas City. Then came back into banking in 2002 and I’ve been working in the bank and in banking ever since.

 

 

 

Kelly Coughlin:

Right. That’s terrific. Let’s talk about your early customer market and the current customer market that the bank has. In the early years, what was the primary market for the bank during the first 50 years of operation?

 

Kyle Campbell:

Well, I think that in the first 50 years of operation, really the customer base was not a whole lot different that it was today. We have always been in a very agricultural oriented area in the state of Kansas. Our focus has been very much oriented towards agriculture, since our founding and also serving our community needs, which meant that in our case, our commercial credits looked like providing credit to Main Street merchants in our communities. Which, very often for us, were very small mom and pop shops that the types of services and stores that were needed in small communities to keep them growing and thriving.

 

Kelly Coughlin:

That has been pretty consistent throughout your entire operating history, correct?

 

Kyle Campbell:

That has been very consistent throughout our entire operation. In fact, if you look at the information that’s available on us today, you’ll still find that about 50 – 55% of our loan portfolio is still in either ag production or ag real estate credit.

 

Kelly Coughlin:

I read a book a while back, about five years ago, it was called The Worst Hard Time. It was the story of those who survived the American Dust Bowl. Was your bank around during that period?

 

Kyle Campbell:

Well, the bank started in 1911 and really our family history started with it in 1929.

 

Kelly Coughlin:

I think this was in ’35 though, so it would have been around during the Dust Bowl period then.

 

Kyle Campbell:

Right, right. So, I think realistically it was a very challenging time back then. As I mentioned earlier, a lot of that type of situation really was what influenced my grandfather’s view on banking and it’s still something that we keep very much mind with our DNA as to who we are at Astra Bank in that he wanted to run a bank that never went broke. He saw far too many go broke and he saw the impact that it had on the banks customers and on the communities that the bank served and he never wanted to subject his customers or his communities to that.

 

Kelly Coughlin:

Right. That does that mean that he was very, very cautious and careful about the loans that he did or patient about collection on the loans?

 

Kyle Campbell:

It meant both of those. He was very cautious about that because he didn’t want to, if he could avoid it, getting into collection situations. At the same point in time, what he also wanted to do, was to make sure that if he got into a situation where collection was needed, it meant that he had exhausted all opportunities and avenues to provide the customer a way to work through that difficult challenge.

 

Kelly Coughlin:

Yeah, because those were terrible times and I would imagine being a banker at that time, where you were close and integral to the community, it would have been very tough to kind of start squeezing people, squeezing your friends and people you go to church with, during those times.

 

Kyle Campbell:

Yes, and it’s one of those things that Mark Twain, I believe it was said, that history doesn’t repeat itself, but it very often rhymes. My dad was faced with a similar situation in the 1980s when agriculture faced another challenging set of years. I think it was a lot of the example that my grandfather set in place, that my father followed which was really prudent and conservative lending into that, that helped them avoid some really serious credit challenges. Also, looking at the example of patience and allowing the customers all of the opportunities that we could afford them to work through the challenges that the economic times presented.

 

Kelly Coughlin:

Yeah, right great. All right. Looking forward and what you’re faced with today as the third generation managing the bank, what do you see the biggest opportunities and then, consistent with that, would be what are the biggest threats that your bank faces or community or regional banking in Kansas is facing?

 

Kyle Campbell:

Well, I think the biggest opportunity that really faces a bank like Astra Bank and really banks that operate in some less densely populated areas of this country, is there is going to be a drive for consolidation, because of the scope and scale of services that banking customers expect today. That drives a certain inherent level of cost structure with it, which does require some scale.

 

So, I think that is an opportunity that is presented to banks like Astra Bank. Now, that situation may be a challenge for some banks that have found themselves in a position where they don’t know if they have the capacity to actually grow through that, but I think there are some interesting opportunities that I hear bankers looking at in terms of being cooperative with other banks that are facing similar situations. So, I think consolidation is a big opportunity that’s out there. It may appear to be a threat to some.

 

Kelly Coughlin:

Well, are you guys on the acquiring side?

 

Kyle Campbell:

Yes. That’s one of our strategies because we can see, as we look forward, there is the potential that we need to continue to grow the scale of our bank, just to continue to be able to serve the communities that we serve in an economical manner.

 

Kelly Coughlin:

Give me a brief profile of, what are you looking for?

 

Kyle Campbell:

There’s some geographical constraints, because obviously, one of the things we know very well is, we know rural communities well. So, generally, we’re looking in smaller communities. Not that there’s anything wrong with larger communities, but generally, there’s a different style of banking that’s present there. We’ve seen far too many banks that have thought that there isn’t really any significant difference between banking in a rural area and banking in an urban area, and they’ve gone to urban areas and basically had it handed to them by banks that were already in those markets. Really, what we’ve come to realize is that the ag concentration that we talked about earlier, we certainly have that concentration, but part of what we feel like we know is, we know how to manage that risk that comes along with that concentration. There are other types of businesses that may be presented within less rural markets that we may as not be as well positioned to handle. We’re comfortable with who we are, and so that’s where we look to as we look to expand. Then, we’re also looking to make sure that we’re in communities that are significant in the areas that we’re targeting, and also making sure that we’ve got acquisition targets that are of a certain size because really, when you go to acquire an institution, there’s a certain base level of work that’s required regardless of the size of the institution.

 

Kelly Coughlin:

Yes. Along with that opportunity goes the need to have adequate professional staff to help run the bank, whether it be the finance, operation side, executive management. That is a problem that plagues community banks in general, but when you’re in the middle of western Kansas, it could be an even more significant challenge. How have you been able to deal with that? How do you get that done?

 

Kyle Campbell:

That is one of the areas that I have always kept an eye open for is, we’re always looking for good quality staff. And if we find good quality people, we’re looking for ways that we can integrate them into the team here at Astra Bank. We as bankers spend a lot of time looking at things that we can easily see on a piece of paper in terms of looking at an institution’s deposit portfolio or looking at its loan portfolio, securities portfolio, etc. But I have a spent a significant amount of time in each of the acquisitions that we’ve done looking at the people portfolio that comes along with it, and we’ve had some very excellent people who are in key positions of leadership with Astra Bank, who have come to us through the acquisition process.

 

 

Kelly Coughlin:

I would imagine, in this environment, where living in big cities comes with an element of risk that it really didn’t have 15 years ago, living in a nice, quiet community in Kansas may appeal to many families just to get to a safer, quieter area. Have you observed that at all?

 

Kyle Campbell:

We have observed that, and we see that there is more of an interest, especially, I think technology is helping rural areas because there are a lot of career opportunities where you had to locate in a major metropolitan area to be physically present to do the job. Whereas today, with the advances of technology, it doesn’t matter where you are as long as you can get access through the Internet to your employer and whatever source of work it is that they have for you. You can do your job from almost anywhere in the world. So, we have quite a few people in the communities that we serve, even though they live in rural parts of Kansas and Nebraska. They’re actually working for employers in some of the country’s most major metropolitan areas.

 

Kelly Coughlin:

Well, for those of you who have never been to Abilene, Kansas, where Kyle is, I’m here to tell you, it’s a very cool city. Kyle, why don’t you describe a little bit what you’ve got going on in Abilene from historical, cultural perspective?

 

Kyle Campbell:

Well, I would be obviously remiss if we were talking about the historical and cultural part of Abilene, if we didn’t start with the most famous person to come from Abilene, Kansas. And that would be the 34th President of the United States, Dwight David Eisenhower. We are very fortunate here in that we have one of the Presidential libraries and boyhood homes of a United States President. So, that is a very big draw to what we have here, and it’s very neat to have something from that scope and scale of a historical significance in our country here in the community of Abilene.

 

Kelly Coughlin:

Yeah, and I’ve been to that library. It’s very cool. So, any of you listeners, I would encourage you to pay a visit to Abilene. Kyle, I’m curious, did your father or grandfather ever meet Eisenhower, or was he born and raised there and exited?

 

 

 

Kyle Campbell:

He was born and raised here, and then exited. There are a lot of people here still in Abilene that knew Eisenhower when he was alive, but I was from more of the north central part of the state. So, where I grew up is about an hour and 15 minutes away now. So, we were more out of the area, and even though my grandfather fought in WWII, he was under a different general, because he was over in the Pacific instead of being in the European theater.

 

Kelly Coughlin:

All right, that’s terrific. Kyle, it sounds like you like what you’re doing. You enjoy it?

 

Kyle Campbell:

It’s great. I really enjoy it. In fact, I tell folks all the time that I think banking is about one of the best careers you could have, because where else do you get the opportunity to work with people on an individual basis and help them achieve their dreams?

 

Kelly Coughlin:

Yeah, and you guys are doing a terrific job there. I know that. Well, that’s all I have, but I wanted to finish with one of your favorite quotes. Or the other option would be to tell us one of the stupidest things you’ve ever said or done in your career, but I’ll give you the choice on that.

 

Kyle Campbell:

Well, I think I could actually share a brief story on both. As I tell folks since I have the opportunity to teach a couple of classes in banking from time to time and telling the students that I’m teaching there is no such thing as a dumb question. I remember my first bank meeting that I went to, and I sat down in the room with a bunch of people who were obviously much more experienced in banking than I was at the time. I was looking down through the agenda and there was an item later in the agenda that caught my attention, and actually, I was kind of excited to see what was going to happen there. I was really in for a big surprise, when we got to that part of the meeting, and I learned for the first time that in banking, OREO does not refer to a sandwich cookie. So, I was very disappointed to learn that we were talking about real estate that the bank had taken back on the liquidation because I thought we were getting close to a break time where we were going to have treats that were brought in. So, I thought we were going to have Oreos for snacks and really, we were talking about other real estate owned. So, that was kind of my first indoctrination. So, I always tell folks, don’t feel foolish if there’s ever anything that you ask, because I’ve probably done maybe even worse assumptions.

 

Kelly Coughlin:

Yeah. Different sweet spot, right?

 

Kyle Campbell:

Yeah. I was going to say, I thought we were going to have a sweet spot and then we were talking about something that wasn’t nearly pleasant at all for anybody. One of the quotes that I often use in talking with folks, and I think it also works for banking, because part of what we need to do in our roles as bankers is really keeping a level head in how we assess situations and making sure that we’re doing the best for our customers. When I was at Kansas State, I had the opportunity to be in a presentation that was made by the person, who at that point in time was the athletics director at the university, and his name was Max Urick. He made a statement that has stuck with me still to this day. His statement was, “Things are neither as bad as they seem nor as good as they seem. The truth is usually somewhere in between.” I found that statement to be very applicable in life, because there is times within the human emotions that we can get too high on the highs and too low on the lows, and realistically, we need to step back and take a very balanced view of the situations we’re in. And I think that’s one of the tremendous services that we can offer our customers as community bankers.

 

Kelly Coughlin:

Yeah, that’s a great quote. I’ve heard derivations of that, but that’s succinctly phrased. I like that. Thank you for sharing that. I appreciate that. Well, that’s all I have. Anything else you wanted to add? Or should we sign off right now? I really appreciate your time.

 

Kyle Campbell:

Well, I want to thank you for inviting me as a guest. I’ve really enjoyed our time talking.

 

Kelly Coughlin:

Thanks a lot.

 

Announcer:

We want to thank you for listening to the syndicated audio program, BankBosun.com. The audio content is produced and syndicated by Seth Greene, market domination with the help of Kevin Boyle. Video content is produced by the Guildmaster Studio, Keenan Bobson Boyle. Voice introduction is me, Karim Kronfli. The program is hosted by Kelly Coughlin. If you like this program, please tell us. If you don’t, please tell us how we can improve it. Now, some disclaimers. Kelly is licensed with the Minnesota State Board of Accountancy as a Certified Public Accountant. The view expressed here are solely those of Kelly Coughlin and his guests in their private capacity, and do not in any way represent the views of any other agent, principal, employer, employee, vendor, or supplier.
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