It’s getting harder these days to find open fields in Rosemount, Minn., a community of 30,000 people that is neither urban nor rural..The exurban community situated south of the Twin Cities, is one of those places where developers have been busy transforming the landscape. In downtown Rosemount, where the First State Bank of Rosemount has operated for more than 100 years, two new apartment buildings have gone up in the last five years. Roughly 2 miles straight east of downtown, new housing spreads where corn and soybeans used to touch the horizon. To meet the needs of a growing populace, amenities have followed: gas and groceries, fitness, childcare, a new school — and now a “bankery,” which is a partnership between two locals: A community bank and a bakery. The new-as-of-June second office for First State Bank of Rosemount, where Sweet Kneads Bakery operates a retail store for its Farmington, Minn.-based bakery, is the latest example of co-branding designed to draw customers into a space where the language of “dough” is well-understood. Meeting the momentWith so much growth in Rosemount’s outskirts and no room to expand as a single-location downtown community bank, Mark Toombs, president and CEO, said he and his family knew they needed to meet the moment. “We wanted to see if we could cultivate more business,” said Toombs, a third-generation community banker. “What better way to do that than to go where people are living.”.So the bank, which has grown to $145 million in assets from a modest $60 million just prior to the covid year, acquired land for its second branch on the northwest corner of County Road 42 and Akron Avenue. Just across the road looking east, Lifetime recently opened a 95,000-square-foot fitness center. Across the road to the south sits 3,000 new, single-family homes. Kitty corner from the branch is the well-established Dakota County Technical College. Traffic through the intersection is a given. Lobby traffic, as Toombs understands after conducting focus groups with millennials and Gen Z-ers, is not. Customers and non-customers who participated in focus group sessions told Toombs and his team that people want a good digital banking interface and they don’t need a physical bank “until they do.” That’s not a message that makes you want to invest in land and bricks.It was, however, the articulation of a long-seen trend in banking, which Sean Raboin, president of HTG Architects, often points to as he talks to bankers about the value of co-branding to generate lobby traffic. Creating brand recognition, Raboin said, and driving traffic to the bank, is the value to be found in co-branding. .HTG has advocated for co-branding for financial institutions since it helped Hometown Bank in Waconia, Minn., bring Mocha Monkey coffee into its lobby more than a decade ago. Raboin talked to Toombs about incorporating a coffee shop into his new branch, which HTG was designing, but “we initially thought we’d go it alone,” Toombs said.Not ready to let Toombs dismiss the idea without deeper consideration, Raboin encouraged the banker to go to Waconia to “sit, observe, and talk to them,” Toombs recounted. So he did. “It made sense,” Toombs said he learned. “It brings people in.”A month later, Toombs took his board on a field trip to Waconia. “They were very supportive,” Toombs said. .The problem that emerged once they were sold on the concept was finding the right coffee shop partner. The business model of the corporate shops – Starbucks, Caribou, Dunkin’ – don’t align with the community banking model. “That’s not who we are as a bank,” Toombs said. When he approached locally-owned coffee shops with the idea of a partnership, Toombs said he didn’t find any interest.Toombs reached out to a customer who owned a graphics business, someone who used to be active in the food business, hoping he might have a lead. “I met him at his shop, explained the concept and asked ‘what do you think?’,” Toombs recounted. “Mark, that’s the dumbest idea I’ve ever heard,” the man told Toombs. “Why would you do that?”.Toombs then enlightened his customer on banking industry trends.“I got a text from him at 6 a.m., the next day,” Toombs said. Call me as soon as possible, the text read. The guy not only “got it,” he had a lead: A bakery that was in expansion mode had just lost out on getting a new leased space in nearby Apple Valley, Minn. Mark called to pitch the idea to the bakery owners. Less than two weeks later, the banker and the bakers came to terms on a lease.Icing on the cakeTo accommodate a bakery inside of its new branch, Toombs asked Raboin to “make it work.” HTG modified the building design, adding 1,000 square feet to what is now a 6,200-square-foot main floor. On the bakery side, anything that’s built in stays if, for some reason, the bakery goes. But that seems unlikely at this point.Sweet Kneads bakes its cakes and pies, donuts and cookies, pastries and breads, at its Farmington bakery 15 miles south of Rosemount. Sales there have remained steady. Activity at its bank-based store is limited to selling. And selling and selling and selling. On mid-summer Saturdays, Toombs has reliably counted 60 people waiting for sweets or coffees or both, between the cases and the two drive-up lanes. To make it all the more enticing, the bakery added a full line of specialty coffees to its menu. .For the bakery, the sales represent new business. For the bank, the bakery opens the door to potential business, day in and day out. The bakery has a side entrance for customers to use when the bank is closed. When the bank is open, bakery customers are welcomed into the building right through the bank’s main entrance.“Our employees greet customers as they walk through to the bakery,” Toombs said. “We have a fireplace and seating; people can sit and do work; people can have a conversation; we aren’t pushy. But what ends up happening is people come to customer service or to me and ask about our bank or our products.”The bank uses the shared space in the center to promote products and services, and share their history through framed images. A glass door separates the two businesses when the bank is closed. “It’s far exceeded what we hoped it would be,” Toombs said. “We are opening new accounts every single day. We have seen growth in new customers, in new deposit customers, and in new lending relationships. That's why we did it.”Toombs said the bakery owners have been great partners. “One of the things I love is their philosophy on community,” he said. “It fits with our own.” The bakery also moved its banking accounts from another community bank to First State Bank.And Toombs, who has dropped 70 pounds in the last year, hasn’t found himself tempted by the daily array of fresh baked goods mere steps from his desk. And while he has seen some staff members partake of an occasional pastry or coffee, whether or not succumbing to sugary temptation has adversely affected anyone else’s weight, Toombs would not say. “I would never suggest that they are,” he said. “I’m not stupid.”
