SPENCER, Iowa - Industrial development officials have long promoted the area along Highway 71 north from Spencer to Spirit Lake, as the "Corridor of Opportunity."
That opportunity is demonstrated most recently in the growth of banks along the Corridor where deposits have grown considerably - more than doubling in Dickinson County in the last 10 years.
According to FDIC figures, deposits in Dickinson County went from $183 million in 1994 to $398 million (a 117 percent increase) in 2004, the latest reporting period for which figures are available. At the same time deposits in Clay County went from $319 million in 1994 to $416 million in 2004 (a 30 percent increase).
Growth largely from within
Spencer banker Neal Conover says growth is the trend mostly in the metropolitan areas. But, he notes, bank growth is also occurring in some rural areas.
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At a recent Iowa Bankers Association convention, Conover said he heard that three out-of-town banks have moved into the Bremer County seat of Waverly, just north of Waterloo, while two local banks have added offices.
"Banks are not up for sale. They haven't been for years. Instead of being buyers and sellers, bankers are turning their attention to a strategy of business growth with new services and locations. This is good for the consumer who will see more choices and accessibility," according to Conover.
Conover's Northwest Federal Savings Bank is just part of the growth along the Corridor.
In Clay County, where there are eight banks, seven have increased deposits. But only four have increased market share.
Bank of America, which is now at the bottom of the deposit rankings in the county with $16.3 million (a 3.94 percent share) as of June 30, 2004, had just over $59 million in deposits (an 18.16 percent share) - placing it in the No. 3 position, as Boatman's National Bank in 1994. Boatman's was sold to NationsBank before becoming Bank of America.
And what happened with what is now Bank of America is indicative of what is happening not only along the Corridor, but elsewhere in the Hawkeye State, where local banks have grown at the expense of larger institutions.
It was NationsBank/Bank of America officials who decided that instead of having a local CEO, the Spencer institution would become a retail branch. As a result, Steve Grell, who had been a part of the bank through several previous owners, sought a new challenge. He became involved in what is today Community State Bank, formed from what, until 1997, had been the Albert City (Iowa) Savings Bank.
Community State Bank, Spencer
Grell, along with three other former NationsBank/Bank of America staffers - Tom Manley, Don Ressler and Diane Berg - are part of Community State, which last June reported more than $45 million in deposits. Ten years earlier, the predecessor Albert City bank had just under $10 million in Clay County deposits from its office in Webb
Grell points to the name of his institution as the difference between his bank and city banks. "We're trying to build a relationship with our depositors." Community provides "a financial center," with insurance and other investment opportunities, as well as e-banking, he says.
But, Manley adds, "the key to the whole works is the people - our people. It's the people inside that really count. We are involved in our community. That's why the name."
And, while e-banking is a growing portion of the banking business (use of electronic transfers exceeded check volume nationwide for the first time last year), "amazingly enough bank offices have not lost their significance," Grell says.
Farmers Trust and Savings Bank, Spencer
Gary Tolzmann, who is president of Farmers Trust and Savings Bank, the largest bank in Clay County based on deposits, with $145 million reported in June 2004 compared to $68 million in 1994, agrees with his competitor.
"A lot of our growth has come from our big-city competitors," Tolzmann explains. "Instead of more changes and buyouts, customers want friendly, hometown, know-your-customer service which we work hard to provide."
According to Tolzmann, Farmers doubled its assets in seven and a half years, from January 1997, to mid-2004, and had a huge staff party to celebrate when the goal set in 2002 was reached two years early.
In addition to the exodus from the corporate banks (Farmers is the only bank owned by the Des Moines-based Easter family) Tolzmann notes that his bank has very little employee turnover, with several staffers who have more than 20 years tenure. Their loyalty, he says, is rewarded. "The last two employees who reached the 25-year mark got vacations in Alaska."
Farmers Trust and Savings Bank is the second largest single-office bank in the state, according to Tolzmann, who added that the only larger such institution is in West Des Moines.
State Bank, Spencer
Also new to Spencer, but not to Clay County, is the State Bank, which was established in Peterson, in 1899. Sole stockholder Wayne Johnson says he moved his bank to Spencer to retain the business of many of his Peterson and Everly customers who were moving to the county seat and appreciate the convenience of continuing their long-term relationship.
Part of that meant modernizing what he bought 25 years ago. "Basically, we were not automated in 1980," Johnson says. In addition to computerizing the bank's records, Johnson has now provided "the sophistication" available at larger banks with Internet services and an insurance agency, in addition to the new Spencer office.
The State Bank grew from $20.9 million to $31.2 million in deposits between 1994 and 2004.
Johnson, who is nearing retirement, says it will be up to his son, Ryan, and Executive Vice President Shane Habben to "take the bank to the next level and continue the State Bank as a family-owned institution in the next generation.
"We all know that means they will have to be very personable. That's where being an independent community bank makes a difference. You can't look at customers simply as account numbers.
"If you're my customer and you've got a problem, you can come in here and we'll do our best to help you solve it. Bigger banks don't see things the same way."
In addition to being one of the few institutions that have lasted past the turn of two century marks, Johnson notes that Bonnie and Clyde robbed his Everly office. "An author in England has even written about it," he says.
Farmers Savings Bank, Fostoria
Just north of Spencer, the Farmers Savings Bank in Fostoria also has shown considerable growth, from $17.2 million in deposits in 1994 to $27.3 million in Clay County in the last reporting period. And, Farmers Savings Bank recently has opened an office in Milford, the southernmost community in Dickinson County, which reported more than $7 million in deposits in Dickinson County in 2004.
FSB President Joe Simington, whose son Chad and nephew Brad represent the fourth generation of the family to be involved with the bank, says he saw an opportunity for growth in Dickinson County and jumped at it. The "secret" to the expansion, Simington says is "that we are heavily capitalized. In our application we only projected a 4 percent rate of growth."
Like the bigger banks, Simington admits that in addition to local service, his bank must also provide the expensive electronic services without the base to spread it over.
United Community Bank, Milford
The most well-established bank in Dickinson County is what 10 years ago was the Dickinson County Savings Bank and is now United Community Bank with two offices in Milford and another in Okoboji along with three more in Lake Park, Hartley and Ocheyedan.
In the last 10 years UCB has grown from second place in county deposits with $33.4 million to first place with $112.7 million as of June 30, 2004. That puts it at the top of the deposits list with 28.29 percent of the county's bank deposits.
Since June, says UCB President Mark Fisher, the institution has increased its deposits to about $200 million through aggressive marketing of deposit products designed to compete with other investment options including the "uncertainty of the stock market."
In the next five to 10 years Fisher, a CPA, says he expects to see $300 million in deposits.
When Highway 71 was widened through Okoboji, UCB moved from a small office there to a much larger new facility farther north, but still in Okoboji. Milford's second office came as a part of an acquisition. And what was the original downtown office was recently expanded to accommodate more employees.
Fisher admits to having an edge on some other bankers in the area as a CPA and being able to not only read customers financials, but being able to interpret them and make them work for the customer. "It makes a huge difference. As a result, our commercial loan success has been tremendous," Fisher says.
Liberty Bank, Arnolds Park
The only bank in nearby Arnolds Park is Liberty Bank, a federal savings bank, which 10 years ago was Lakes National Bank, with $23 million in deposits compared to $45.2 million last June.
Liberty Bank is one of only two banks in Dickinson County that has not expanded facilities in recent years. Liberty's marketing manager Steve Lindberg notes that Liberty, which has now seen two owners since being Lakes National, "is the first of the group of new Liberty Banks based in Des Moines."
Liberty's president, Kurt A. Kuta, explains that since Liberty re-established itself in 1998, the bank has grown to 21 branches in 16 communities, including Council Bluffs, Des Moines, Dubuque, Cedar Rapids, Iowa City and Iowa Falls. And, Kuta continues, "we are always considering new opportunities for growing markets.
"One way to provide service to our customers and communities is to have more branch locations. However, that is not the only way to accomplish the level of service we and our customers expect. Our commitment to the communities we serve is important to us and will remain our focus as we continue to be Iowa's fastest growing community bank," Kuta says.
Northwest Federal Savings Bank, Spencer
Perhaps the most aggressive bank in Dickinson County in terms of growth in the number of offices is Spencer-based Northwest Federal Savings Bank. Northwest Federal recently moved from what had been a gas station in south Milford to a new and much larger facility in north Milford.
And since establishing its first Milford office in the early 1990s, Northwest Federal built a new office on the west side of Spirit Lake's downtown area. "We're out of space in that (second) Spirit Lake office," says President Neal Conover, "so we're building in Okoboji."
Northwest Federal recently acquired property in Arnolds Park. "But we have no plans on how we're going to utilize the property," Conover says. "It's a great little corner location for something."
Conover says the need to be located for the convenience of his customers is important. And the new Okoboji location, he says, should be more convenient for customers in Arnolds Park and Okoboji as well as the developing area to the south and west of downtown Spirit Lake. "We have to be geo-aware," Conover notes. "We're just happy to see our business grow."
That growth, Conover explains, comes with customer service provided by enabling people with the authority to make decisions locally. "Its our M.O. (modus operandi). Responsibility and accountability are the guideposts. Every one of our managers is a true bank president. And we take our business plan from the needs of the community."
Conover's bank, which listed $39.9 million in Dickinson County deposits in 1994, increased those deposits to $48.9 million last year, but has lost market share for deposits in the county, according to the FDIC.
State Bank, Spirit Lake and Terril
The other Dickinson County bank with no recent physical move is the State Bank in Spirit Lake, with an office in Terril. Bank chairman Chuck Wetzeler, whose son Bill is president, says the State Bank may expand right where it is, with property already purchased in its near-downtown Spirit Lake location. But, like Conover and his Arnolds Park property, Wetzeler says he has no immediate plans.
"There's enough competition up here, especially with the changes in farming. Deposits and loans go together," Wetzeler notes. "It's a chicken-and-egg thing. But you have to have deposits first. Borrowing money to make loans is a newer phenomenon - not something that was done in the 1930s."
Wetzeler's bank was chartered in Terril in 1928. An Akron native, Wetzeler came to Spirit Lake in 1964 after working in several other banks in Iowa and Illinois. The State Bank has grown substantially in the last 40 years, he notes. The FDIC deposit figures show 10-year growth from $25.1 million in 1994 to $39.2 million in 2004.
Bank Midwest, Okoboji
Bank Midwest, which was originally the Wall Lake (Iowa) Savings Bank, dating back to the 1880s, is the newcomer to Dickinson County.
Through an acquisition BMW is now based in Fairmont, Minn. While the holding company is based in Okoboji, its office will soon be moving to a new Spirit Lake retail banking office in what had been the Hy-Vee store in the Great Lakes Mall. The Okoboji bank location will be maintained at its present site.
According to bank and holding company President and CEO Steve Goodenow, BMW is a "community focused regionally-based financial services company - a tightly-held group with locations in Northwest Iowa and southwest Minnesota."
An employee stock ownership program, he notes, means his staff "takes an active interest - leadership roles - in the communities where they live and work. They're involved in things like their churches and Little League. It's up to all of us to make our communities stronger."
Goodenow says he will continue to pursue opportunities as they come along.
In Dickinson County, Bank Midwest deposits have grown nearly tenfold in 10 years, from $5.6 million in 1994, to $53 million last year.
First Bank & Trust, Spirit Lake
No. 2 in deposits behind only United Community Bank, First Bank & Trust is in the process of expanding from its downtown Spirit Lake location to a second office to the west and south on Highway 71.
President Larry Shaffer says he hopes that having a presence in the growing part of Spirit Lake "will get us new customers and make it more convenient for our existing customers in that part of town."
First Bank's growth, Shaffer says, is based on loan demand. He calls it "phenomenal. The reason we're seeing more banks is that they can make more loans." With no insurance or investment alternatives offered other than bank deposits, Shaffer says First Bank is concentrating in the lending area.
Deposits at Shaffer's bank have grown from $37.8 million 11 years ago to $56.9 million last year.
Several retailers, a restaurant and professional offices will surround the new First Bank office, in what is known as Ferguson Business Park.
Shaffer says First Bank is "totally focused on the lakes area, in regard to both business and residential loans."
His new location will help, he says, because "even with the growth of electronic banking, people are going to bank where it's convenient to go every day."
Central Bank, Spirit Lake
With just one Dickinson County office, John Brown's Central Bank is the successor to what had been Security State Bank, with $25 million in deposits in 1994. As Central Bank, Brown has increased that figure to $35.3 million in the two years ending last June.
Brown says he and his brother, Tim, who is president of Central Bank, Storm Lake, weren't looking to enter the Dickinson County market when they bought the Security State Bank offices in 1999. "It wasn't our focus. Dick Kuehl came to us," he says.
After the purchase, the Browns sold the offices in Lake Park, Milford and Hartley to UCB, and subsequently built a new facility in Spirit Lake. In addition to the Spirit Lake and Storm Lake offices, the Browns have Central Bank locations in Cherokee and Sioux City, a total of six offices.
Even with all the recent bank growth in Dickinson County, Brown, a former examiner for the Federal Reserve System, says he has no further plans to expand and jokes that he doesn't think "there's any real estate left for another bank office."
Other than what Brown termed "prestige and ego" he says he knows of no rationale for what has happened. Many communities, he admits, are "over banked."
Before they bought the former Security State, its office was in the Great Lakes Mall. Brown says he followed Hy-Vee's lead in moving from a temporary location farther east on Highways 9 and 71, to his present facility on the same highway, but on a corner that didn't exist as a corner until the Dickinson County Fairgrounds was moved north a few years ago.
Brown explains that the increase in local deposits has come from "people migration. The area is just growing in general. People want to live here and drive to work wherever."
Mortgage competition, he notes, comes not only from local lenders, but also from out-of-town banks. "Our largest competitor is all the out-of-town banks. All mortgages from outside the county are the largest 'bank' competitor."
