Two-Track Growth

Root Beer Floats—Choice Financial Group employees served root beer floats and freebies at their city’s Alive at 5 downtown street fair in Bismarck, N.D., an event that draws the support of many local businesses.

Root Beer Floats—Choice Financial Group employees served root beer floats and freebies at their city’s Alive at 5 downtown street fair in Bismarck, N.D., an event that draws the support of many local businesses.

Choice Financial Group first grew organically, then by acquisition

By Ed Avis

Some community banks grow organically, while others grow by acquisition. Choice Financial Group, a $1.1 billion-asset commercial bank headquartered in Fargo, N.D., has traveled both paths.

Top-50 Fastest Growing Bank

Choice Financial Group
Fargo, N.D.
Assets: $1.1 billion
Retail locations: 19
Employees: 230
Website: www.choicefinancialgroup.com

Operating from a charter first established in 1906, Choice Financial of today was formed by the merger of four rural banks in North Dakota in 2001. The combined entity had $150 million in assets after the merger; by 2014 the bank had grown organically to $625 million in assets.

“Each of the four banks was in a different rural market, and we got better market penetration when the four banks came together,” says Brian L. Johnson, the bank’s CEO. “And in 2005 we branched to Grand Forks and in 2006 we branched to Fargo. So it was a combination of new geography and better operations that allowed us to grow organically.”

Choice Financial was, and still is, a significant lender to farmers in its geography, which spreads from the border of Canada all the way to the southwestern corner of the state. Loans to farmers of sugar beets, potatoes, grains and cattle comprise about 40 percent of the bank’s lending portfolio. Commercial lending makes up another 40 percent; multifamily and residential lending equals 15 percent; and the remaining 5 percent is consumer lending.

‘Knocking on doors’

Johnson became CEO in 2011, and in the subsequent 18 months he prepared Choice Financial for further growth via acquisition by converting its core operating system. He notes that not only did the conversion improve the bank’s core system, but it also let employees experience change, which would give them a better understanding of what an acquired bank experiences.

“Then we went knocking on doors,” Johnson says. In 2014, Choice Financial acquired a $190 million-asset bank, and in 2015 it bought a bank with $200 million in assets. “The two banks we acquired weren’t on the block,” he says. “They probably could’ve gotten bigger bids, but they felt we were a good cultural fit for them and had the resources to help them grow.”

With those acquisitions, coupled with additional internal growth, Choice Financial more than doubled its employee count to 230 and exceeded $1 billion in assets.

“With the mergers we obviously had higher lending capabilities, and we increased our efficiencies by combining staffs, which allowed us to invest in people, marketing and technology,” Johnson says. “I always equate it to farming: With one four-wheel-drive tractor you can cover 2,000 acres as easily as 1,000 acres and your costs come down.”

Even though Choice Financial is headquartered in Fargo, its executive team is scattered among several of its 19 locations. Johnson works from the office in Grand Forks; the chief financial officer works in Langdon; the chief risk officer is in Bismarck; and other leaders’ offices are elsewhere. This happened by accident as the mergers took place, but Johnson feels geographically scattered leadership is an advantage.

“We’ve found it to be an effective way to manage and for the employees to have access to senior leadership,” he says. “We think it works well.”

Building a brand

Johnson says he believes the success of Choice Financial is partially due to the brand it has built during the years of growth. By cultivating an aura of strength combined with community-based values, the bank is attractive to new employees and potential acquisition targets, he says.

“We feel we can grow to three to four times our size and still have that family, community and people-first culture that we have today.”
—Brian L. Johnson, Choice Financial Group

“We are still seen as a community-based bank, but we’ve also built our brand,” he says. “I personally feel that’s what launches you. That’s how you attract the team and other partners.”

A set of core values—such as “Embrace change and encourage innovation” and “Seek and share knowledge”—that is taught to new employees and reinforced with desk placards and other reminders keeps the staff focused on the values that have guided the bank’s success so far, Johnson says.

Choice Financial has not stopped growing.

“We have a desire to operate in North Dakota, South Dakota, Montana, Minnesota, Iowa and Wisconsin,” he says. “We feel we can grow to three to four times our size and still have that family, community and people-first culture that we have today.”


Ed Avis is a writer in Illinois.

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