A Wisconsin native builds a banking and manufacturing empire

In June 1998, Dennis Frandsen was on a bus, stuck in New York City traffic. Beside him sat Minnesota businessman Glenn Taylor who is best known as the majority owner of the Timberwolves basketball team. Taylor and the other owners – a group that included Frandsen – were in the Big Apple to watch the NBA All Star game. But Frandsen wasn't letting his time in gridlock go to waste. Scribbling on the back of an envelope, Frandsen was making a play for Taylor's $300 million banking franchise..Frandsen already owned 10 banks with assets totaling $400 million. Taylor's banks were the largest opportunity Frandsen had come across in 16 years of bank ownership, with the potential to add six more charters to Frandsen Financial Corporation and nearly double its size..A few minutes earlier, Frandsen and Taylor were making small talk. "Glenn shared with me that he was involved in an unpleasant situation at his banks. The fellow who was running the organization had suffered a serious illness and didn't know when he would return to work," Frandsen recalled. "Glenn said he was really a printer and said he was considering selling the banks.".That's when Frandsen produced the envelope from his coat pocket, "How about I buy them Glenn?" he asked..Although not a banker himself, Frandsen was ready to act on his instinct and make the largest deal in his lifetime..It was no great leap for the serial entrepreneur. He had worked for himself since 1951, when he was 17 years old. And, before he bought his first bank in 1982, he had built franchises in logging, real estate and manufacturing..Schooled on the farm.Frandsen traces the beginning of his entrepreneurial instinct back to Luck, a small town in western Wisconsin. Born there in 1933, he learned the meaning of work on the family farm. Getting up early to milk the cows was an everyday task; and he often missed opportunities for fun enjoyed by his peers because he was helping his father. "Work came first," Frandsen recalled. "Dad insisted I help on the farm. Sports just weren't something I got to do. But it helped me. I gained a different perception of work," added Frandsen, who sees his businesses as a hobby from which he does not plan to retire. .Frandsen and his brother never received an allowance. Their father wanted them to earn their way. This spurred Frandsen's first profitable endeavor at age 10 — selling homegrown cucumbers to a local pickle company..By the time Frandsen graduated from high school he had started a logging business, felling and selling maple trees to a local yo-yo factory. When he graduated, his father told him to get a job in Minneapolis. The best job the 18-year-old found paid $300 a month, a salary which would have barely paid his expenses. So, Frandsen decided to pass on the job in the big city, instead continuing to operate Frandsen Logging and Lumber Company from his parent's farm..Beginning with this venture, Frandsen established the habit of reinvesting his earnings, barring only the funds he took as a salary, to expand his business. The young businessman also understood that capital keeps businesses running, so he often borrowed more than he needed and paid it back sooner than expected. "I wanted my company to grow; I also wanted to increase my funding capability," Frandsen explained. "I didn't want the fancy car or the nice clothes.".By 1953 he had a truck, chainsaw and had hired his first employee. And then he learned of 200 acres of virgin timber near Rush City, Minn. Having walked the land, he knew there was money to be made. So, he bought a plane ticket and flew to Chicago, appearing unannounced at the door of the woman who owned the land. While she wouldn't let him in at first, she did agree to sell him the land for $13,000. Now, all he needed was the money..Returning home, Frandsen visited his bank in Luck expecting to get the needed loan. "But, the banker said he wouldn't lend me the money," Frandsen said. "I walked out saying 'I am going to own this bank one day.'" Then, he traveled to Rush City. The bank there also turned him down. Finally, he heard of a banker in Grantsburg, Wis., named Walter Jensen. Traveling to Jensen's office, Frandsen explained his plans. "After an hour, he told me he'd lend me the money," Frandsen said smiling..Within five months Frandsen had repaid the loan, made another $13,000 with half the timber still standing, and he still owned the land. What's more, he met his wife Jeanette in Rush City. The two married in 1956 and moved to town..Afterward, as Frandsen continued to operate his logging business, he decided to build a house for his growing family. He found a prime lakefront location on farmland outside of town. When he approached the owner about buying the land, the farmer hinted he wanted out of farming with a sarcastic joke. "You can buy the whole farm if you want," the farmer said. So, Frandsen purchased the farm at farmland value. He built his family home, and then developed the remaining lakefront land into homes and cabins, selling each lot for many times the original value. .In 1961, another opportunity came Frandsen's way. A small, local manufacturing company was on the verge of bankruptcy. The owner was a friend, Duane Stenmo. Frandsen knew him to have good technical skills as well as strong relationships with customers. "He just wasn't good at the business side of it," Frandsen said. So, Frandsen persuaded the Rush City Development Corporation (of which he was a member) and several other investors to buy control of the company. Frandsen offered to run it without compensation, with the stipulation that he would receive a percentage of the profits if the company became profitable. By 1978, he had bought out all the other investors..Repeating his longtime habit of saving earnings for later investment — always borrowing more than he needed and paying back faster than the bank expected — Frandsen would open, buy and sell numerous manufacturing companies in the coming years. Today, he is sole owner of two manufacturing companies with combined annual sales of more than $140 million..Back to Luck.As Frandsen's business grew, so did his banking needs. Needing a larger bank, the manufacturing mogul moved his relationship to a correspondent banker named Kenny Wales at U.S. Bank. "Wales was the kind of banker who really got to know you, found out where you were from, where you went to high school," Frandsen said. "Consequentially, we became friends.".Then, one night in 1980, Wales invited Frandsen to a Minnesota Twins game. "I happened to have shared with Kenny my aspirations for owning a bank," Frandsen said. "So, he pulls me aside at the game and asks me if I was still interested in owning a bank. I said I was. Then he tells me, 'The bank in Luck, Wis., where you were born, is up for sale. If you want our help, we'll do it.'".Frandsen contacted Fidelity State Bank of Luck; the owners of his youth were no longer there. In fact, the bank had been sold twice since Frandsen had been refused a loan nearly 30 years earlier. "I didn't associate the bank with the old management," said Frandsen, recognizing the coincidence. "When I first called them, they didn't even think I was a legitimate buyer, but I told them I knew the bank was for sale and that Kenny Wales was prepared to back the financing." .With Fidelity State Bank, Frandsen began another career-long practice. "I decided early on, I buy good banks. I do not want to fix anything," said Frandsen, who noted that the bank's health is his only benchmark when buying..He closed the deal for the $25 million bank in 1982. "The first thing they wanted to do was hand me the keys, so I could run the day-to-day operations," Frandsen said. "I decided to hire Tony Johnson, one of the previous owners, to stay and run the bank.".Johnson, who is still with the company today, was Frandsen's first teacher in the rules and operations of a bank. As sole owner, Frandsen chaired the board, having chosen directors from the community..He also sat on the loan committee, and his judgment about credit proved exceptional. When asked about business judgment, Frandsen reached into his desk drawer. "Success in business is managing people and managing money," he said, withdrawing a small, green notebook and placing it on his desk. The pamphlet is his first ledger, showing expenses like "gas" scribed in pencil on one line, followed by revenue, marked "yo-yo," on the next line.."I have always made a personal financial statement and I require financial statements from all my business managers," said Frandsen, who had just returned from reviewing three of his banks near Brainerd, Minn., with the region's president..Banking expansion.Forming Frandsen Financial Corporation just after the Luck bank acquisition, Frandsen went on a bank-buying spree. Acquiring many banks across Minnesota and in border communities in Wisconsin and North Dakota, Frandsen repeated his long practiced habits. He kept talented bankers within the organization to run his banks. He continued to build cash with earnings, and continued to borrow more than he needed and paid it back faster than expected, ever strengthening his relationship with U.S. Bank..His banking company prospered even more from this approach because Frandsen decided he would take no salary from his banking business. "I don't have an expense account and I haven't taken any money out of the banks either," Frandsen said. "I have income enough from my manufacturing business; I leave the banks' revenue to grow the company through acquisitions.".By 1998, sitting on the bus next to Glenn Taylor in New York, Frandsen knew his way around a negotiating table, even when one wasn't present. And he had the capital, the staff and the borrowing capacity to buy Taylor's banks. "I am going to make you an offer Glenn. It's based on no issues in the banks. We'll do our due diligence. Without problems, the company's worth $50 million," said Frandsen, having done some calculations on the seat between them.."Do you think you can pull that amount off?" Taylor asked. "I told him I'd have to check with U.S. Bank," Frandsen recounted. "That's a heck of a lot of money.".The next day, Frandsen called U.S. Bank. "They told me they'd call me back in 24 hours," he said. "The next morning they called and said they were willing to do the deal. When Glenn called I told him I had the money. We met at the Timberwolves office and worked out the final details. My team did a circuit reviewing all his banks in North Mankato, New Ulm, Hector, Fairfax, Minnesota Lake and Jordan, concluding they were good banks. So we closed the deal and nearly doubled the size of our organization," said Frandsen, whose Arden Hills, Minn.-based bank holding company now has $1.5 billion in assets and 38 branches in Minnesota, Wisconsin, and North Dakota.."I should have kept that envelope and framed it," Frandsen said. "It was all very touch and go."