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Q&A

15 Minutes with Bell Chairman Richard Solberg



As Bell State Bank & Trust celebrates its 50th anniversary, we sat down for a question-and-answer session with Richard Solberg, longtime chairman of Bell’s board of directors and a major shareholder in the company.
 
“First of all, I’d like to take this opportunity to say thank you to our correspondent banking partners for doing business with us!” Solberg said. “We never take that for granted. We do get asked a lot of questions about correspondent banking and our bank’s growth, and I want to take this opportunity to answer some of them.”
 
Q. How large is Bell’s correspondent banking area?
A. It’s a growing part of our company. We started back in the ’90s by helping a few smaller North Dakota banks with participation loans. These were banks without large lending limits, and their customers’ borrowing needs were becoming greater. Today, we have bankers actively connecting for correspondent opportunities in 14 states (North and South Dakota, Minnesota, Wisconsin, Illinois, Iowa, Nebraska, Kansas, Missouri, Idaho, Montana, Wyoming, Colorado and Arizona). Occasionally, deals come up in other parts of the country. We’ve recently done some loans in Nevada and Washington state. We are working directly with more than 200 banks, and our correspondent lending portfolio exceeds $450 million.
 
Q. Why do banks choose to do correspondent business with Bell?
A. The banks we are working with want a correspondent bank that doesn’t directly compete with them, so they can keep the customer relationship.
           They’re also looking for quick loan decisions when needed. (Which is not a problem for us, because we don’t have to call San Francisco for a decision.)
           They want to work with a bank that has a large lending limit, so if it’s a large participation, they don’t have to go to several banks. (We make correspondent loans up to $10 million, so we can accommodate most requests.) And, they want to work with a bank that does not re-participate the credit.
           On larger loans, they value our perspective on risk, structure and other factors.
           And finally, they like doing business with a bank that combines lending capacity with community bank values.
 
Q. You mean there’s a $4 billion bank that’s headquartered in Fargo, North Dakota? How does that happen, and how does a privately held bank maintain the required capital ratios?
A. Bell’s growth has occurred primarily organically, rather than through acquisitions. We’re now one of the largest independently owned banks in the country and the largest in our region. We’ve done this by operating the way community banks, as a rule, operate – around the philosophy that people matter. Like so many of our correspondent banking partners, we’ve always believed in knowing our customers well and doing right by them.
            Yes, we have been obsessed by growth – and I would say we’ve focused on growth over profits. I don’t think you can have continued, significant growth and off-the-charts profits every year. At times, we’ve priced loans lower and deposits higher in order to grow. Sometimes you might have to fight with the “bean counters” to do it – but if you don’t do it, your growth is not sustainable. This strategy might not help us make the “high performing banks” list for earnings, but we don’t have the pressure of next quarter’s earnings that publicly held companies do.
           Over the years, our stockholders have been willing to sacrifice dividends, putting our profits back into the company in order to support growth.
 
Q. Are there other strategies that have helped the bank grow?
A. We have bought a few smaller banks over the years, but acquisitions are not our typical strategy. We do what Alex Sheshunoff years ago called “buying the horses instead of the barn.” We’ve added a lot of great people who embrace our simple “bottom line” mission: “Happy Employees! Happy Customers!” If you hire good people who enjoy what they do, are proud of where they work and are rewarded when the company is successful, they’ll treat your customers well, and both employees and customers will bring significant business to the company.
 
Q. Many banks got out of correspondent banking during the financial crisis of ’07 and ’08. Bell didn’t. Why not?
A. Our loan losses during that period weren’t something we blamed on bad correspondent loans or bad underwriting. These were good people, good companies, with loans that were underwritten well – but those were tough times.
            Because so many banks got out of correspondent in those years, it actually was a good time for us to expand. We now have correspondent bankers in multiple “hub” cities, and the territory extends way out for our correspondent “road warriors.” Our footprint and commitment to correspondent banking keeps growing.
 
Q. Are you doing more of any specific types of loans?
A. We do an unusual volume of bank stock loans to bank ownership groups and holding companies, enabling them to purchase banks, buy out shareholders or inject capital needed for growth.
            Lots of correspondent banks don’t do loans to this group – but because we’ve been on the other side of the ledger, it’s an area we understand. Growing banks and bank holding companies often need long-term financing, and we’re willing to be flexible in how we structure their loans.
           
Q. Do you see Bell going public at some point, due to its size?
A. No, because we think we have a big advantage being privately owned. I believe when you go public, there’s a change in the culture of your company. We don’t want our focus to be on managing for short-term earnings, rather than a long-term investment – including the greatest investment, our people.
 

New Correspondent Banking Officers Helping Community Banks


Denise Bunbury
Helping small towns thrive is one of the things Denise Bunbury likes most about her job.

She is the new vice president and correspondent banking business development officer for Bell State Bank & Trust, which is headquartered in Fargo, N.D. Denise is based in Madison, Wis., and covers all of Wisconsin and part of northern Illinois.

Working in correspondent banking gives her the chance to help community banks succeed.

“Community banks are really the heart of any community,” she said. “They do more than deposits and loans; so many of them are giving back to their communities. They have community rooms, community events. Because so many are in small towns, that bank may be the only social hub for a lot of the residents. It keeps those communities going.”

Travel is a big part of Denise’s job. When traveling she likes to support the locally owned cafés, shops and other businesses she encounters.

“It’s those small places that have built those communities,” she said. “I’d rather the money stay directly there. It’s being reinvested back into the community. I also get to meet a lot of really interesting people.”

Denise started working for Bell April 11. Prior to that, she worked as a commercial lending correspondent officer for Bankers’ Bank for seven years.

Q: What drew you to Bell?
A: The philosophy – it’s the whole family-owned, family-run business values and giving back to the community.

What do you do as a correspondent banking business development officer?
I talk to banks – senior lenders, bank presidents, chief financial offers – about Bell, tell the story, and ask for participation loans. We buy participation loans and sell loans that Bell has originated in its portfolio. We also offer bank holding company loans for acquisitions or liquidity purposes.

How did you get into correspondent banking?
I kind of fell into it. I’ve been in banking since 1984. I was in commercial lending and always wanted to stay with a community bank. Bankers’ Bank contacted me and their customers are strictly community banks, so I found out I could help community banks.

What are the greatest rewards of your position?
I like making a difference, whether it’s with community banks I’ve forged relationships with or any new relationships I form.

What difference can you make for community banks?
I can help them with their liquidity, making sure they have enough capital so they can help with an expansion or acquire another community bank, therefore helping them out.  I can also help their customers who may be going through expansions or maybe they have got a customer who has grown so big that they think a community bank can’t take care of them any longer. That’s where we come in and assist with that so that customer doesn’t leave that community bank. Keeping those customers, the banks can remain in their communities and not worry about larger customers leaving and depleting their deposits.

What do you like about traveling so much for your job?
I like meeting all the people, hearing their stories, and I also get to see so much of the area. People are awfully friendly and very warm and receptive.

What do you like to do when you’re not working?
I quilt and I like to cook and spend time with friends and family. I have a grown daughter who lives in the Twin Cities I visit a lot.

My significant other and I take his motorcycle and go down south to the Ozarks and the Smoky Mountains. We ride a lot through Wisconsin and Minnesota, Iowa and Illinois.

What is your work philosophy?
My family always told me that if I work hard and persevere, I can accomplish anything. I firmly believe that and I try to instill that in my daughter as well.

I’ve always given more than 110 percent to anything I put my mind to. I’ve always tried to do my best with dignity and integrity, and build credibility so people know they can count on me.

I’m an obnoxiously happy person. I try to make the best of any situation. Everybody has a bad day now and then, but I try to find the best in everything. 
Mary Voss
In Mary Voss’ office, the scenery is constantly changing.

She is the new vice president and correspondent banking business development officer for Bell State Bank and Trust, which is headquartered in Fargo, N.D. Mary lives in the Des Moines, Iowa, area and covers Iowa and portions of Nebraska, Missouri and Illinois.

“I love that my primary office is my vehicle,” she said. “I always have a great view, and while weather may slow me down, it doesn’t scare me at all.”

Mary started with Bell in December. Prior to that, she was a correspondent credit officer for Bankers’ Bank. She worked for Bank Iowa for 20 years before that, starting out as a teller and working her way into all types of lending.

“I think I have a unique perspective when discussing participations with bank management and lenders since I have been on both sides of the desk, both as a community banker and a correspondent credit officer,” she said.

Q: What drew you to Bell?
A: My first impressions were at bank functions were I often ran into Bell State Bank & Trust folks; they were so nice and professional. I was also impressed with how much banks respected the organization. Bell has a great reputation.

After looking more deeply at the company, I was pleased to find that it’s such a community-minded bank and that they encourage all employees to get involved in the world around them.

One of the ways I like to give back is by providing a financial literacy program to the fifth graders at the school where my husband teaches. We talk about setting financial goals, the difference between needs and wants, and how students can earn money, spend it wisely, and save for the future. I teach them how to balance a checkbook, what happens if you overdraft your account and we discuss compounded interest. I think learning to be fiscally responsible is a critical life lesson that unfortunately seems to missing in many of our schools.

What do you like the most about your position?
It’s very satisfying work. I especially like talking to bank presidents about the history of their banks and what their vision is for the future. I love that Bell can help them achieve those goals.

What do you like about traveling so much for your job?
I am a farmer’s daughter from Nebraska, so I really enjoy driving down the country roads. I will take the back roads over the interstate any day. I enjoy the view out my window of the fields and the farmhouses.

We’ve lived in Iowa for 31 years, so it’s great to get to know the state better. There are so many places, people and events that I didn’t even know existed. You don’t if you’re on the interstate.

What do you want your clients to know that they might not realize?
Bell has a terrific ag department. A lot of the other correspondents here in Iowa don’t have that expertise. I think that’s what sets Bell apart from our competition. 

Also, due to our hold limits, we can help alleviate concerns for those banks that do not want their bank holding company loans, director loans or participations sub participated to others.

As far as bank stock loans, it’s important that they know that each one is unique. There is no cookie-cutter bank stock loan. We can structure things in a way that fits a bank’s balance sheet or income statement and we’ll work with that bank to make sure that the payments are structured so it flows with what they’re used to.

It’s also important that they know we can put a revolving line of credit in place that can help them position themselves if they’re looking at an acquisition. That might help them when they’re filling out their applications with regulators. Even if they’re not planning to use it right away, we can help them get things in place so they can plan their budgets and plan their futures a little more confidently.

How do you spend your time outside of work?
I am very involved in our church. I am on the Pleasant Hill Cares Committee where we provide funding for senior citizens who need small home remodeling projects done, or to make their homes handicapped accessible. I am also involved in the Altoona Chamber of Commerce and Relay for Life. In my spare time I love to visit my children, garden, fish and golf.
 

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Contact Us!
Tom Ishaug
Fargo
701.866.4676
tishaug@bellbanks.com

Gary Keller
Fargo
701.371.3355
gkeller@bellbanks.com

Tracy Peterson
Minneapolis
612.270.3314
tpeterson@bellbanks.com

Gene Uher
Sioux Falls
605.201.1864
guher@bellbanks.com

Mary Voss
Des Moines
515.577.0070
mvoss@BellBanks.com

Denise Bunbury
Madison, Wis.
608.234.1438
dbunbury@BellBanks.com


First-Quarter Financials

Bell State Bank & Trust
March 2016

Capital Ratios
Common Equity Tier 1 Capital
10.01%
Total Risk-Based Capital
10.91%
Leverage
8.93%
Key Call Report Information
Total Assets
$3,889,293,000
Total Liabilities
$3,536,765,000
Total Capital
$352,528,000
Total Loans
$3,468,456,000
Total Correspondent Loans
$440,688,000
Total Loss Reserve
$30,475,000
Net Income
$8,887,000