First State Bank & Trust Company in Fremont, NE, is battling a typical scenario of the Plains states: a small-town environment with an aging population and a dwindling pool of potential customers.
The biggest city in the state, Omaha, is about 35 miles east but that's little consolation to CEO Ronald Kranz, since his customer radius extends, at most, five miles in any direction. Contrary to what some small-town advocates claim, Kranz and government demographers say that people are not leaving the cities in search of a friendly, small-town atmosphere. Rather, the opposite is happening: People are leaving small towns and rural areas permanently. Small-town population loss isn't a new phenomenon. The slide began in the 1970s and accelerated through the 1990s, according to research from the Federal Deposit Insurance Corp. "The customer base here is older and we work hard to attract young customers and employees," Kranz says. With about 25,000 people in Fremont, it certainly is not as small as many other towns in the Midwest and Plains states, but it still makes for a situation where the bank must fight for every customer.
And it is meeting with some success. Even against the tough backdrop of Nebraska banking, Kranz has increased assets at his bank 450 percent during his presidency that began in 1989. Assets today are $165 million, up from $30 million when he took the reins. And he says the privately held bank maintained a return on assets of 1.5 percent throughout the first 10 years of his presidency. It dipped to 1.3 percent in 2000, when the bank accomplished two major goals: opening a trust department that required a new building, and launching a branch at Wal-Mart. Since then, Kranz says the bank's profitability has been rising to the current 1.4 percent of return on assets.
One of the more inventive strategies the bank has employed is its creation of First State Bank University, which sponsors classes aimed at educating the public on a number of topics, says Cindy Hasemann, marketing and business development director. Classes focus on personal finance and small-business issues, Hasemann says. Some classes use the bank's small-business customers as instructors. One of the more popular classes was conducted by an owner of a landscaping business and focused on plant cultivation based on season. It attracted more than 80 local residents.
One idea for a future class is a tutorial on how to buy and sell items on eBay, Hasemann says. Both she and Kranz say ideas for classes are ultimately drawn from residents. In the first 18 months, some 2,400 people have attended at least one class.
Another way the bank has cemented its place in the community is by sponsoring a year-long game, "The Mole," which is modeled on a reality TV show. It involves teams performing a series of physical and mental challenges. But the real task is to ferret out the double agent in their midst who is trying to sabotage the teams' efforts along the way.
For the bank's version of the game, proceeds of nearly $22,000 went to a local Catholic high school. The game took on a life of its own, Hasemann says, as it weaved together various local events and kept much of the town guessing just who was the game's mole. Players bid to get into the game, with most bids in the hundreds of dollars and the winner walked away with $2,000 in prize money.
Teams met every month or so to complete their various tasks, which included basketball shooting contests, singing competitions and written tests on the subject of actual moles. The rules were complex, and evolved as the game progressed. A second version of the game begins this month.
The benefits of these types of programs are difficult to quantify, says Hasemann, but there is anecdotal evidence that the programs are working. A college student opened an account with $1,000 the day after hearing a First State Bank University lecturer extol the virtues of compounding interest and the importance of saving early in life.
Kranz is convinced this type of community interaction is always a plus-and can lead to more business. "In a small town, either you're involved or you're not anybody."
