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Neal & Dwight Conover, Northwest Bank

Two Iowa farm boys from Holstein, Iowa, Neal, left, and Dwight Conover, acquired two failed savings and loan institutions in Spencer, Iowa, on Dec. 30, 1988. They have since built Northwest Bank into a financial institution with locations in 14 communities in Iowa and Nebraska. They are now building a new $10 million administrative office in Spencer, bringing nearly 100 staffers under one roof.

SPENCER, Iowa -- Dec. 30 was the last business day of 1988 -- a time when Ronald Reagan occupied The White House. “War Requiem” was one of the most viewed movies of the year, and Tom Clancy's “The Cardinal Of The Kremlin,” was one of the best-selling books.

It was also the day two farm boys from Holstein acquired two failed savings and loan institutions in Spencer -- Home Federal and Northwest Federal -- and opened Northwest Bank. Neal and Dwight Conover acquired the thrifts from the Federal Savings and Loan Insurance Corporation (FSLIC) in the wake of the national S&L crisis.

Neal Conover, who on that final day of 1988 became president of the newly-created Northwest Bank, said he and his brother knew Spencer was a good business community, but had little first hand knowledge and only a distant relationship with the city, other than participating in the Clay County Fair. He recalled a time in the 1960s, that after winning a livestock judging contest at the fair, he went right down to Eddie Quinn’s and bought a new coat.

Both brothers studied in different agricultural fields at Iowa State University. After graduation they each worked in various roles for Des Moines-based Brenton Banks, before being offered the opportunity to buy the Brenton bank in Creston, Iowa.

“Both state and national banks were being closed in the late 1980s because they were undercapitalized,” Neal Conover said. "They had too many farm loan losses. The S&L industry was suffering, too. Spencer’s Home Federal and Northwest Federal were examples of the thrift organizations that were making 30-year home loans and three month certificates of deposit. When the rates started to go up, the cost of deposits increased and in short time they were losing more money on higher costs of funds and couldn’t change the rates on their home loans. That depleted their capital very quickly. The FSLIC stepped in in those cases -- as they did in Spencer -- to find new owners."

Neal Conover noted he and his brother were still considered young at the time they acquired the S&Ls.

“I was 42 when we came to Spencer. We were two young, ambitious, and hard-working farm boys. We knew the industry. We were in the right place at the right time with the right set of skills. So we were sought after. People liked what we did. We were asked to do more in these situations and we wanted to capture the opportunities as well.”

It was through friends that the duo knew about Spencer as a business community. “When Dwight and I were thinking about new opportunities we recognized that Spencer really did have a lot of what it took to be a great community. And it needed to have a great bank to be a great community,” Conover said.

He explained that many banks at the time were working hard but struggling with their own portfolios and were not looking toward the savings and loans for expansion. “Almost nobody was. I don’t think any other bank in Iowa bought a savings and loan in that time. I think we were the only ones. Investment groups like Bass Brothers and others bought a lot of savings and loans. But not many bankers did.”

Conover shook his head, exclaiming, “Heavens no,” and laughed when asked whether he and his brother had initially given any thought to growing two failed savings and loans into a banking group that three decades later would encompass 14 Iowa and Nebraska communities with assets of $1.6 billion -- after starting out at about $200 million.

“We didn’t have any money at all when we started (at the Creston bank). The contract when we bought Creston was nothing down.”

“We really didn’t have any great expectations. And we never set any growth targets. We never said we’d be a billion dollars by this date or that date .We just did the best we could in each community.”

Today, Conover says he believes Northwest Bank is one of the largest home mortgage lenders in the state, even though all its offices are all west of Interstate 35, which bisects the state.

Northwest Bank is in the midst of constructing a new administrative center in Spencer. The $10 million project will allow the bank to consolidate its administrative functions at a single site. The new building, scheduled to open in early 2020, will be home to about 80 workers, with room to add 20 or so more in the future.

WHAT HELPED THE BANK GROW?

Conover says that like other traditional commercial banks, Northwest Bank was initially doing ag and commercial loans, with only some occasional home loans. “But home loans weren’t our bread and butter, as it was for the savings and loans.”

So the first thing the brothers did after acquiring the S&Ls was to study and better understand the home loan business.

“The key to success in this new industry we had just bought in to, was do to that very, very well. We had some new people who looked at the processes and helped us improve them, so that the time it took to close a loan was about 13 working days from application to closing -- instead of about a month previously and at other institutions,” he said.

“By being able to turn around a home loan in record time, Realtors began to look at us as a good source of financing for their clients. And the same way, other people in the community, lawyers, CPAs, and the like would tell their clients to ‘go get a mortgage from Northwest.’ So we got a good reputation -- and began to make some good commercial loans, too. Along with that we began to open some new banking offices in places like Ankeny and Des Moines, Omaha and Ft. Dodge.”

Conover noted there was only a very limited time that the Federal Deposit Insurance Corporation (FDIC) issued De Novo charters -- charters for new banks starting from scratch. “So it was a combination of energy and pursuing the opportunities as they presented themselves.”

LOOKING AHEAD

After a series of meetings earlier this year, Conover says plans call for Northwest Bank to continue to be a family organization.

"We have a long-term strategic plan, and a long-term capital plan, so we can pass the banks on to the next generations of the Conover family. The family is working to provide good directions to our bankers so that the organization can be expected to be maintained as it is or grow further and faster in the future. That’s the plan for the next 25 to 30 years. That’s where the new operations building comes into the picture in Spencer.”

Contact Journal correspondent Russ Oechslin at: russ-scj@mindspring.com

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