Spotlight

Not long after the sale of Ozaukee Bank, Dean Fitting, the former president of the bank, decided to try a new concept in community banking..The idea was to achieve a balance between community banks' need to remain locally owned and managed, while still supporting their needs in a way that reduces costly overhead..He turned to two partners: long-time bank consultants Jon (Jack) Schumacher and Edwin Depenbrok. Together, the three established Partnership Community Bancshares in 2007 and looked for a bank with strong operations in a good market..After looking at several banks, the company raised $10 million and closed on a deal to purchase 90 percent of First Community Bancshares Inc., parent company of First Bank in Tomah, Wis., in December 2007. The former owners kept the other 10 percent, and PCB sold 10 percent of the stock back to Tomah-area shareholders..The first deal's 80/20 split helped the bank holding company receive tax-free dividends from the bank and offset any potential losses. PCB's model, however, is to inject 51 percent of the capital and to rely upon leaders in the community to raise the other 49 percent.."We believe our 51-percent/49-percent model drives success. With local ownership, decisions and sales responsibilities are kept at the local level where they belong in the community, not in corporate offices hundreds of miles away," Fitting said. "The holding company's backroom then provides marketing support, compliance, loan operations, credit analysis, investment management and ALCO – all things that take time, energy and competent people which are very expensive for small banks. This allows the bank to retain its focus on helping its clients and communities.".In early 2008, Partnership Community Bancshares acquired Town and Country Bank in Watertown, Wis., a community of 24,000 residents. The bank was a perfect fit for PCB's community bank formula – a small, locally-owned bank in a market saturated with regional and nationwide banks. While the holding company team continued to consolidate the compliance and loan operations work, they kept the responsibility of growing the bank on the front lines..At the same time, Fitting – who had spent his entire career at Ozaukee Bank, starting as a lender when the bank opened in 1975 – was eager to return to his home county in the northern Milwaukee metro area.."It's always been my goal to return to the marketplace that I helped to grow from zero to $800 million," Fitting explained. "Once my non-compete agreement expired, we started discussions with people in the community as well as regulators to gain approval to open a bank in that marketplace.".Despite the difficulties of the banking and economic environment, PCB raised $2.5 million in capital by October 2012 for its ownership stake and opened Partnership Bank in Cedarburg on Dec. 3. The new bank is a branch of First Bank, Tomah, and employs several of Fitting's former associates who left after BMO Harris Bank acquired Ozaukee Bank..A loan production office First Bank operated in Menomonee Falls, Wis., has been merged into the Cedarburg operation as well..The ownership and shared services model is working, Fitting said. "We've proved the concept and are ready to grow. Our shared services units are consolidated and now have the capacity to handle more banks.".Although PCB is primarily focused on growing its three locations, it is always looking for new partnerships with community banks that are looking for a fresh start and backroom support.."Loans around the state have started to get cleaned up but many boards and managements are just worn out. They have difficulty managing the compliance. With our concept, banks can retain their name, their shareholders in the community, and in many cases, their management," Fitting said.."What's holding back a lot of consolidation is that everyone remembers that banks were worth two or three times book. That's not the case today," he continued. "Until boards come to the realization that book value may not be what they are worth, those kinds of link-ups probably won't happen.".Fitting says his current role in marketing and credit suits him well personally. He and Schumacher serve on the boards of each of the banks and participate in the loan committees. They work regularly with David Braaten, president and chief operating officer of the holding company, and the bank presidents.."As long as we're having fun, we are very enthusiastic about what we're doing and what our future is," he said.