How 125-year-old community banks stay up to date

By Katie Kuehner-Hebert

As the banking industry continues to consolidate, and fintech upstarts with the latest apps tantalize the younger generations, it’s good to know that there are more than a few community banks that have withstood great tests for more than a century.

The five community banks profiled here survived the Great Depression. They overcame changes in laws that allowed megabanks to cross state borders and encroach upon their local communities. They adapted to seismic shifts in technology, from the first computers and ATMs to mobile apps.

But they haven’t just survived—they’ve thrived. As these community banks show, old dogs most definitely can learn new tricks.

Let’s hear their stories.

Clockwise from left: West Bank’s Rochester, Minn., facility, built in 2016; its current HQ in West Des Moines, Iowa, when the building opened in 1972; founders Herman and Anna Raaz; and its original location in West Des Moines in 1910.

West Bank, founded 1893

West Des Moines, Iowa

West Bank was founded in 1893 by Herman and Anna Raaz, who moved to the United States from Germany and worked their way to Iowa via railcar to the train depot known as Valley Junction, says Dave D. Nelson, chairman and CEO of the $2.2 billion-asset bank.

The bank was originally known as Valley Junction State Savings Bank, but when Valley Junction changed its name to West Des Moines, the bank’s name changed to West Des Moines State Bank. After the institution expanded outside of West Des Moines, it became West Bank.

“West Bank is the oldest business of any type to be founded in West Des Moines, and 125 years later, the original West Bank building remains standing in historic Valley Junction,” Nelson says. “Cofounder Anna Raaz is believed to be the first female cashier in the state of Iowa.”

The community bank now serves central and eastern Iowa as well as Rochester, Minn. “West Bank was built upon relationship building, community leadership, and helping people and businesses reach their financial goals,” Nelson says. “West Bank is known for having highly seasoned bankers who have been with the bank 30 to 40 years, and many for their entire banking career.”

Where will your bank be in another 125 years?

“I hope our nation still has a community banking system like we do today. Our income-tax-paying American banking system is the envy of the rest of the world, and perhaps the most important part of our nation’s economy.”
—Dave D. Nelson, West Bank

A combination of efficiency and consistent prudent underwriting enabled the bank to survive the Great Depression, the farm crisis of the 1980s and the more recent global financial crisis.

As with any community bank, having and managing good vendor partnerships is essential to keeping up with technology advancements, Nelson says. West Bank also invests a great deal in local relationships, and forms a community board wherever it conducts business to foster local connections.

“From our humble beginnings in 1893, one thing has not changed,” says Nelson. “Every customer, from the smallest to the largest, deserves our full attention and top-notch customer service. And we’re poised to meet the needs of those customers well into the 21st century.”

Washington State Bank, founded 1893

Washington, La.

Washington State Bank was founded to stay ahead of the dramatic changes in technology that were occurring at the end of the 19th century, says Sue Soileau Durand, president, CEO and chairman of the $191 million-asset community bank.

At the time, Washington was the largest port city between New Orleans and St. Louis, but the steamboat era was coming to an end, and railroads arrived in 1891. The founders recognized the economy would expand at a much faster pace than it had been, increasing demand for banking services locally.

“The bank was founded in 1893 due to the creativity of townspeople who did not want to rely on New Orleans banks any longer,” Durand says.

On April 21, 1893, the Opelousas Courier wrote: “We are pleased to see our neighbors of Washington showing such evidence of enterprise and progressiveness as the establishment of a bank with a $50,000 capital. … [It] presages a bright future in store for our sister town.”

Durand recalls a former bank director telling her the bank was able to stay open during the Depression because it was so remotely located that it enjoyed a longer “bank holiday” before regulators could visit.

“The regulators began with large banks in the urban areas and only much later got to smaller banks in smaller communities,” she says. “But then their stagecoach could not get to the bank during the Depression to alert the bank to close. It was wintertime—lots of mud.”

While that’s a true story, Durand says the bank was also able to survive because of “the conservative community service banking philosophy it has always maintained.”

Where will your bank be in another 125 years?

“Exactly where we started: abreast of technological changes and still serving the needs of the local communities. That is always the goal of a great community bank.”
—Sue Soileau Durand,
Washington State Bank

Perhaps the bank’s greatest challenge came in the 1980s, when Louisiana’s laws changed to allow banks to operate branches in multiple parishes. After that, many larger banks moved into Washington State Bank’s St. Landry Parish area, says Durand. After the economy in its home market declined, the bank decided to expand into adjacent parishes itself.

Today, the bank has branches in six communities in and around “the virtual crossroads” of I-10 and I-49, expanding its products and services to both individuals and businesses, Durand says. “The bank started with $50,000 in capital, and now we have close to $20 million,” she says. It uses part of its capital to launch new technologies as they emerge. These include mobile apps, remote deposit capture and online banking, as well as new offerings, such as white-labeled free checking and savings products through Kasasa.

“We’ve always been technologically savvy for a community bank,” Durand says. “We have all the bells and whistles of the large banks.”

The bank board and management’s future plans? “To remain the best community bank” and also expand farther into southern Louisiana’s Acadiana region, Durand says. “I also want to encourage more women to join my board.”

Lessons learned from a bank that’s lasted so long? “Along the line, somebody made the right decision every day,” she says. Also, “we still have the philosophy that a smile and a handshake still have value.”

Clockwise from left: The First Citizens National Bank of Upper Sandusky’s main office today; employees Tweila Keller and Ellen Johnson in the vault; the bank’s board of directors at its 64th anniversary celebration in 1952; Thomas A. Reber, bank president from 1932 until 1967; and construction of the current main office building in 1907.

The First Citizens National Bank of Upper Sandusky, founded 1860

Upper Sandusky, Ohio

The First National Bank opened its doors in 1860, with Thomas V. Reber as president and Sylvester Watson as cashier, says Mark Johnson, president and CEO of the $281 million-asset community bank. In 1946, the First National Bank and Citizens Savings Bank consolidated, forming the First Citizens National Bank of Upper Sandusky.

“We still have the original general ledgers the bank tellers had written from 1860, and coins from the late 1800s decorate an old teller line in our main office,” Johnson says.

Thomas A. Reber served as president of First Citizens through the consolidation from 1932 until he died in 1967, and his son, Albert Reber, was then elected president. The founder’s grandson and great-grandson followed him. Today, Nancy Reber Johnson, Thomas V. Reber’s great-great-granddaughter, is chairman.

Where will your bank be in another 158 years?

“I see our bank as a one-stop financial shop, serving people’s entire financial needs across the board. I think financial solutions for people in the future will look drastically different–there may not even be currency. I also see our bank growing to become a regional Midwest bank.”
—Mark Johnson, The First Citizens National Bank of Upper Sandusky

“For most of our years, banking stayed the same,” Mark Johnson says. “Then, after the Great Recession, things have dramatically changed, and it’s accelerating today.”
First Citizens has added staff with engineering backgrounds to help the community bank launch the latest customer-facing technologies, including mobile banking, and also to automate many internal operations, he says. The bank now offers a voice-over internet system and is upgrading communication in the boardroom for video conferencing.

“We’ve also added brick-and-mortar,” Johnson says. “A new branch in Marion, Ohio, has a tech bar, café, teller money pods and big-screen TVs.”

The community bank’s strategic plan, called its “Big Hairy Audacious Goal,” is to double its market shares in markets served, including Columbus and Marion, Johnson says.

“Our culture has not changed. We’re still known as ‘Old Reliable on the Square,’” Johnson says. “The vision statement we adopted in 2008 states that every customer is a customer for life, and ‘Old Reliable on the Square’ ties into that. As a small community bank, we have to bring value to the customer experience and what we can do for small businesses.”

From left: Bank of Holland’s first employees; its current Holland, N.Y., branch; and the bank’s vault after a 1910 fire ravaged the city’s business district.

Bank of Holland, founded 1893

Holland, N.Y.

In 1893, a group of local businessmen decided it would be “a great opportunity for the community” to establish a bank in Holland, N.Y., says Timothy W. Dickey, president and CEO of the $129 million-asset bank. The Bank of Holland started with $25,000 in capital. At the end of the first year, deposits were $44,977, and it paid the first dividend of 6 percent in 1895.

In 1910, the “worst fire in the history of Holland” wiped out the business district, including the bank branch. Only the vault survived, says Dickey. “Fortunately, the vault was protected, as well as the contents, and the bank faced no financial loss,” he says. “Immediately after the fire, a new bank building was planned and constructed across the street from the original branch. This building is still the headquarters today.”

Where will your bank be in another 125 years?

“Continuing our goal to create and maintain long-term working relationships with our customers, to contribute to our community by helping local businesses grow, and to support good causes that improve the quality of life for all. We just might have robots for customers, too.”
—Timothy W. Dickey, Bank of Holland

The Depression years saw bank holidays, Federal Deposit Insurance and a reduction in interest rates, Dickey says. However, the Bank of Holland paid dividends to its stockholders every year but one: 1933.

Other significant developments through the years: An ATM was added to the single branch in 1993, and computers were first added in 1993. In 2003, the Bank of Holland opened a second branch in East Aurora, the first new branch in more than a century. In 2016, Elma got a third branch.

“While at one time the bank was happy to slowly move into new technologies, it became quite clear in the 1990s that would not be possible anymore,” Dickey says. “Technology has changed rapidly in the past 30 years, and the Bank of Holland has tried to keep pace with it. We feel that for our size, we match up with many larger banks in our community.”

The community bank offers online banking and bill pay, and a custom bank application, as well as mobile deposit. The Bank of Holland also offers a full cash-management product to its business customers.

“Our vision for the future is to maintain our quality of service to our customers while expanding our services,” Dickey says. “Expansion is not out of the question, as we would like to see more small community banks throughout the area competing against the megabanks of today. We are also preparing for additional competition from Amazon, Apple, Walmart, etc.”

From left: The Bank of New Glarus employees outside its current location in downtown New Glarus, Wis.; and bank employees standing outside its first location on Sixth Avenue.

The Bank of New Glarus, founded 1893

New Glarus, Wis.

The Bank of New Glarus began in 1893 as a five-way partnership between Fred Kundert, J. C. Zimmerman, Thomas Hefty, T. C. Hefty and B. A. Kundert, says Ronald J. Schaaf, president and CEO of the $280 million-asset community bank.

After launching with $12,000 in opening capital, the bank incorporated 10 years later under state charter and became a publicly owned bank with deposits of $121,000. The Bank of New Glarus continued to grow when it merged with Citizens Bank of New Glarus in 1921. Today, it has additional Sugar River Bank branches in New Glarus, Belleville, Brodhead, Juda and Monroe, Wis.

“The major change at the bank was in 1962, when Waldo Freitag became the first president to actually work in the bank day-to-day on a more hands-on basis,” Schaaf says. “Also, the bank started to make more commercial loans, as the board realized the bank had to be more community-minded and be available to help the local business people.”

The Bank of New Glarus has become a strong commercial lender, making CRE loans, equipment loans and working capital loans for small businesses, he says. At the same time, it maintains its robust residential mortgage lending operations and also makes “a fair amount” of ag loans.

The community bank has stayed on top of technology and has focused on cybersecurity “to be able to keep our assets and our clients’ information safe,” Schaaf says.

“We’ve always been ahead of our customers. They didn’t have to come to us demanding these technologies,” he says. “We can’t compete with the Chases and Bank of Americas of the world, but we think we do a good job of keeping our technology pretty sophisticated.”

The Bank of New Glarus is updating its core processing system, including online and mobile banking, which will be completed right after its 125th anniversary. “Then we can say, ‘We’re 125 years old, but we’ve got brand-new technology within a week,’” Schaaf says.

In 2016, the bank opened a loan production office in Madison, and its management and board are “always looking for potential opportunities,” Schaaf says.

The Bank of New Glarus has withstood the tests over the past century in great part because it has remained locally owned, Schaaf says. “We’ve also lasted 125 years because we’ve been under good management, and we know how to stay within the things that we do well, and we know our market well,” he says.


Katie Kuehner-Hebert is a writer in California.

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