Iowa bank's entrance into Minnesota town complete

Northwestern Financial Review, Jul 1-Jul 14, 2004 by Hilgert, Jackie

The de novo institution, Community Bank, is open for business in the southern Minnesota meat-packing community of Austin. The new bank operates at the same location - 805 North Main Street - as Security Bank Minnesota, Albert Lea, had operated its Austin branch for the last decade.

Lake Bank Shares, Albert Lea, the holding company for Security Bank Minnesota, struck a deal to sell the branch to the de nova's organizers, Community National Bancorporation, Waterloo, Iowa, earlier this year. The old branch is now the new bank's home office.

Community Bank, Austin's opening occurred simultaneously with the completion of the branch's sale. The new full-service bank opened with approximately $21 million in assets and more than $5 million in capital.

"We got a price we felt was too good to resist," said Phyllis Monson, president and CEO of Security Bank Minnesota of the sale. "The timing seemed right for a little reorganization for us and we got a very nice premium on it so the board decided we should take it.

"Joe [Vich] was anxious to get into Austin with a deposit base in place," Monson continued, referring to the president/CEO of Community National Bancorporation. "There is a lot of competition over there and one more bank would have been one too many."

Security Bank Minnesota and Community Bank, Austin, signed a non-compete agreement that allows Security Bank Minnesota's former Austin customers to retain a relationship with their former bank only if they provide a written request to move their accounts. Prior to the sale, Monson told customers that Community Bank wanted to enter the Austin market and selling was just a good business decision for Security Bank. "We just did the closing and we held our deposits right to the end," Monson said.

Austin provided Security Bank Minnesota with a lot of deposits and some consumer lending, but not much business on the commercial side, Monson reported. That may soon change.

"Community Bank is a commercially-oriented bank," said Robert Cooper, president and CEO of the de novo. Organizers felt the Austin market mirrored the Cedar Falls, Waterloo and Mason City markets that have brought Community Bank success in Iowa. "We felt that our type of banking environment could be successful here in Austin," Cooper added.

The simultaneous branch purchase and de novo opening was a "winwin," he added. "We purchased an excellent location on a very busy intersection which is a high visibility corner," he added.

Cooper said they've already started to "purple-ize" the building to bring it in line with Vich's favorite color. The color is a trademark for the bank, he said, and should be a hit with Minnesota customers who also are Vikings football fans.

The bank's first day of operation was June 4 and Cooper reported first day transactions went well. "It's been just a little chaotic," he laughed. Community Bank's sister bank, Community National Bank, sent in extra help for the de nova's opening days, which coincided with Social Security weekend. "Our clientele is older and change is hard, but so far people have been very accepting of the change."

Cooper, a 34-year banking veteran has been with Community National Bancorporation in Waterloo for three years. He is joined in management by: Noel Austin, senior vice president; Alicia Scheevel, branch manager, and Michael Farrell, senior vice president and cashier. Additionally, five employees from Security Bank Minnesota were retained by the new bank. With the exception of Vich, Cooper and the remaining 10 members of the bank's board of directors are Austin residents.

Community Bank is the second bank charter operated by the $270 million Community National Bancorporation, which was formed in 1997. Community National Bank is the other; it has seven banking locations, all in Iowa.

For Monson, who still oversees the Albert Lea and Emmons, Minn., offices, the sale of the Austin branch was a new, yet pleasant, experience. "They were very good people to work with," she said. "If we had a difference of opinion, we'd sit down and get it ironed out in 10 minutes and go forth." This way they got a very nice building, a great location and a customer base to start with, she added.

"Community banking is what we know and do well," said Vich. "We are pleased to begin our presence in Austin with an established branch location."

A grand opening celebration is planned for later this year.

By Jackie Hilgert