CONFAB: Independent Community Bankers of Minnesota

Obstacles and opportunities considered at ICBM annual meeting.Three bankers identified recent obstacles and talked about how they overcame them in a matter-of-fact dialogue at the 54th annual convention of the Independent Community Bankers of Minnesota, conducted August 5-6 in Duluth. Paul Moen, senior vice president and chief financial officer, Bridgewater Bank, Bloomington; Tiffany Baer Paine, president and CEO, Security Bank USA, Bemidji, and Anita Drentlaw, president, New Market Bank, offered thoughts that effectively illustrated the convention's theme: "Expect Obstacles; Create Opportunities.".Moen talked about the issues related to successfully completing an acquisition, something his banks have done six times in the last eight years. Five of the acquisitions took place when Moen worked for Frandsen Financial, and the most recent took place at Bridgewater, where he has worked since June of 2015..Moen said acquirers need to work to assure employees at the target institution. Moen knows what it feels like to work at an acquired institution, as the bank where he had worked (First National Bank of Hudson, Wis.,) for nine years up to 2007 was acquired by Associated Bank of Green Bay, Wis. "The buyer needs to get out there early and talk to the employees," he said. "You should tell the employees about your organization, what opportunities they might gain. They will be nervous especially if the acquirer is from out of town.".Bridgewater Bank recently completed acquisition of the $75 million First National Bank of the Lakes, a consumer bank that brings an entirely new line of business to the $1.2 billion Bridgewater Bank, which is focused on real estate lending. Moen explained that Bridgewater hosted an all-employee gathering early in the process, matching First National's 25 employees with Bridgewater employees in a kind of professional "buddy system." Moen said the relationships formed have proven beneficial. President Jerry Baack addressed the group, describing Bridgewater's mission, vision and values. Moen said through the transition, only three First National Bank employees elected to leave the bank..Baer Paine described the dilemma her bank faced when its long-time compliance and audit employee retired. The bank conducted a formal search for a replacement but their search concluded after six months when a former accountant stopped to inquire about potential employment. "She said all she ever wanted to do was be an auditor in a small community bank," Baer Paine explained..Baer Paine said the bank needed to find a way to justify the salary for such a hire. Complicating the situation was the need for redundancy in the position, given how long it takes to train someone in the intricacies of bank compliance. Baer Paine said she discussed the situation with colleagues at other banks in the region. It turned out many of them had need of an accountant but couldn't justify hiring one full time. So, Security Bank decided to hire the accountant and offer her services to the other banks. Now Security Bank generates enough income from nine other banks that it offsets the cost of its accountant and employs another 1.5 FTEs dedicated to accounting and audit at the bank..Drentlaw said New Market Bank had to work through a number of issues during the financial crisis. Focused on short-term challenges, Drentlaw said she had little or no time for long-range or strategic planning. As conditions improved, the board began to spend time on long-range planning. Questions from board members came up about ownership's options for the future. Drentlaw said she is committed to maintaining the independent, family ownership of the bank. "We want to keep the bank in the family, locally owned, community focused," she said. "We have a great board; they challenged us a lot… These were some of the hardest conversations we have had.".While Baer Paine said her bank has beefed up its compliance, she said she also has noticed a difference in the examiners who have come to her bank in the last year or so. She said they seem more eager to work with bankers. "Now, when they come, you feel like you have a good relationship with them," she said. She attributed the change to years of advocacy by state and national trade groups representing community bankers..Baer Paine emphasized the benefits of turning to fellow bankers for help with specific issues, as her bank did with its compliance officer opening. She applauded innovative approaches being taken by banks such as Atwater State Bank in central Minnesota which hired an attorney who it subcontracts to other banks. "It's not just regular banking anymore; it's not just loans and deposits," Baer Paine said. "We have to figure out where we fit, what our specialties are, and share those with each other. We are so much better with our friends. If we can diversify, if we can specialize, we are just that much stronger.".Moen took the concept of networking in a different direction with comments about the way his bank markets. "Networking at Bridgewater is having events where there is bank staff but mostly costumers with whom we do business, getting them to network with each other. They have a lot of common interests. All our growth is internal," Moen said of Bridgewater, which has grown an average of 30 percent per year since opening in late 2005. "It is through that networking and our very friendly staff that the bank has grown.".After the on-stage dialogue, the ICBM convention audience broke into small groups for 30-minute roundtable discussions on specific industry topics. A day prior to the convention's opening ICBM hosted a directors' conference in which industry consultants addressed topics such as risk management, ownership strategies, and mergers and acquisitions. The meeting took place at the Duluth Entertainment and Convention Center..Harry Wahlquist, ICBM Chairman for 2015-16, said the association is as strong as it has ever been in recent history. "With a growing list of bank members, with an expanding roster of vendors, with our annual revenue in excess of $2 million per year, and with our dedicated staff under the direction of new president and CEO Jim Amundson, your ICBM is truly poised for the future," said Wahlquist, chairman, president and CEO of Star Bank, chartered in Bertha, based in Eden Prairie..Wahlquist headed up the search committee that earlier this year hired Amundson to be ICBM president and CEO. Marshall MacKay, who had been the association's leader for nine years, retired on June 30. Amundson is a founder and former president/CEO of the 13-year-old First Advantage Bank in Coon Rapids, Minn., which was sold in the last year to Border Bancshares, Inc., of Greenbush, Minn. Wahlquist said the search committee considered numerous applicants, including five finalists. Ultimately, the search committee decided to hire a former banker to lead the association, carrying on the qualification first brought to the ICBM job by MacKay. Amundson was visible throughout the meeting, introducing many speakers and making announcements from the podium.