In December 2012, UMB Bank tapped Bill Watson to head up a new division for the bank, focused on building and expanding upon an agriculture portfolio that consisted mainly of deals done in Kansas and Missouri.
Watson, 65, has done a lot of things in his career, including serving as president and CEO of the former Union National Bank, the city’s third-largest bank until it was acquired in 1995 by Commerce Bank.
But he said he’s never built something out of nothing.
“And I’m having a lot of fun,” Watson said.
Since creating UMB’s agribusiness division, Watson has built a Wichita-based team comprising five bankers who work out of a leased office at 155 N. Market. Watson said he plans to add at least three more bankers this year who will be based in Colorado, Texas and St. Louis.
“We’re just 18 months old,” he said. “So we’ve been trying to grow gradually and recruit people in markets as we go.”
Agriculture is also a personal interest for Watson, who farms 30 acres near Wichita and who made his first ag loan as an Indiana banker in the 1970s.
Probably the first thing is it’s a great opportunity for me to start a new division of the bank from the ground up. The bank’s been in agriculture for 100 years, but a lot of that was concentrated in Kansas and Missouri. I like to think this is the golden age of agriculture. There’s an enormous amount going on, and I really like the complexity of agriculture right now. So, you put it all together, and we’re working in about 10 states on an active basis right now. All in all it’s a pretty exciting thing.
Our growth has really exceeded our plans. The American Bankers Association has now put us in the Top 50 ag banks in America. And the FDIC (Federal Deposit Insurance Corp.) reports had us as 49th largest ag bank. In their last report, they had us at 44th. We’ve booked over $100 million in new loans in 18 months.
The road is where the business is so that’s where you’ve got to go.
Again, we’re in a golden age of agriculture. Commodity prices have been high for awhile and they remain high from a historical perspective. … The flip side of that – input costs – have also gone up dramatically and won’t necessarily come down. So that’s a challenge. Another big thing going on in ag is land prices. We’ve seen land prices do everything from increase maybe 10 to 15 percent in last 10 years, to land prices triple in places like Iowa, Illinois and Nebraska. One of the first challenges I noted was international competition. They’re certainly having much more of a direct impact on American agriculture … more and more world agriculture is impacting on us. In the fall, we had a pretty darn good looking wheat crop. We were going along and had pretty low wheat prices .. and then all of a sudden the Ukraine (a major wheat-producing nation) blows up. And … because of international events, wheat prices start to go up. Issues of demand in China or India is one of the big underpinnings on commodity prices. And there are literally hundreds of millions of people on the other side of the Pacific who are eating animal protein once or twice a week. And their parents were eating it once or twice a year. So there is a sustaining, major social shift that is putting pressure on grain prices. That’s … both an opportunity and a challenge.
I think we’re going to have a very strong year. We have just an excellent pipeline, with new opportunities hitting almost every day. Another part of being a startup is building awareness. As that awareness builds, so does the pipeline and so do the opportunities out there. So I expect this to be a very, very good year for the agribusiness division.