It's all in the name

Business as usual as big bank takes its place in small town

David Fettig | Editor

Published July 1, 1997  | July 1997 issue

The first time that anybody in the small southern Minnesota town of Dundas heard about the sale of their only local financial institution, Cannon Valley Bank, to a relatively large Wisconsin bank holding company, was when the announcement hit the local papers in early June.

"I called out there right away," says Kathy Feldbrugge, executive vice president of the Northfield Area Chamber of Commerce.

"There was some hesitancy at first," admits Duane Swanson, president of the $25 million asset bank, about what to expect from the new owner.

And that hesitancy is understandable, Swanson says, both on the part of bank customers and employees. Customers, both business and personal, want to know about the new owners of the bank and what kind of institution it will become, and employees, of course, want to know if they will have a job and, if so, they want to know more about their new employer.

So far, both the customers and employees are happy, says Swanson, who will stay on to lead the institution when the nearly century-old bank becomes a branch of F&M Bancorporation, a $1.4 billion asset holding company based in Kaukauna, Wis. "If they [F&M] are true to their word and this remains a community bank, then it will work," Swanson says.

The chamber's Feldbrugge agrees: "If the people stay the same, and they're conducting business as usual, we won't even notice."

A community bank by any other name ...

Sometimes, when a big bank buys a small bank, many of the employees will leave or lose their jobs, and that's unfortunate, Feldbrugge says, because continuity is important. Bank customers like to know that they are dealing with someone who knows them, she says, and who knows their community.

"We discovered that people like to talk to us," Swanson says. "People like to be known when they come in the door."

Gail Janssen, chairman and president of F&M, says that he understands those concerns, and that it is important for the bank to remain focused on its customers. "We really believe in making decisions at the customer level—as close to the customer as possible."

That doesn't mean that F&M doesn't take advantage of the benefits of consolidating bank tasks. Such operations as financial reporting, investment and human resources can all be handled most efficiently in a central location, Janssen says. But he says that activities that impact the customer should be made at the customer level.

"Mortgage decisions should be made by the person across the desk," Janssen says. "That's what people want."

Those are encouraging words for Swanson, who joined Cannon Valley Bank at the end of 1993 when the bank had about $15 million in assets. He says the bank has been working hard to establish a stronger presence in local agricultural lending, increasing its agricultural loans from $1 million to $8 million during that same period, and the bank wants to continue its aggressive efforts.

"They've assured us that the customers won't notice any difference, except for the name out front," Swanson says.

However, there may be some other changes, Janssen says, but they should be to the customer's advantage—like the addition of new products and the ability of the bank to make larger loans without having to work through a correspondent bank. "It's always a challenge for a small bank to meet the growing credit needs of a community," he says.

One way that F&M gained the confidence of Cannon Valley employees is the amount of time their executives spent in Dundas, Swanson says. They explained and promoted the company's operating philosophy, met individually with each employee and took everyone out to dinner. Swanson says he has been involved in other acquisitions in his banking career that have gone much less smoothly.

Small step into a big state

F&M's interest in Cannon Valley Bank was obviously not motivated by the intention of getting a small slice of the southern Minnesota agriculture market; rather, the bank offered a good opportunity to get into the state of Minnesota. Janssen says that F&M is clearly interested in expanding within the state, predominantly within the eastern third.

F&M has a facility in Hudson, Wis., on the western edge of that state and the eastern edge of the expansive Twin Cities metro area, a lucrative market that F&M hoped to tap. However, banking laws do not allow the Wisconsin bank to market to Minnesota customers—to do that, F&M needed a Minnesota presence, Janssen says. It just so happened that a lawyer who was working with F&M on the Hudson bank also worked for the principal shareholders of the Dundas bank, and that's how F&M became introduced to Cannon Valley.

"This gets us into Minnesota and gives us a chance to look at other opportunities," Janssen says. "I think we would like to expand that bank."

For now, the residents of Dundas and nearby Northfield are less concerned about F&M's Minnesota strategy than its business in their region. Feldbrugge, of the Northfield chamber, is hopeful that Cannon Valley Bank will remain a strong community presence. She said that in her experience in Northfield, it doesn't matter if a bank is locally owned or the branch of a larger bank, all the financial institutions are good for the community. "They're some of our best members."