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With a Chairman, President and CEO Who is a Farmer, The State Bank of Faribault is Able to Understand the Needs of the Ag Community they Service
John R. Carlander
President/CEO/Chairman
The State Bank of Faribault
Interview conducted by:
Bud Wayne, Editorial Executive
CEOCFO Magazine
Published – July 17, 2023
CEOCFO: Mr. Carlander, in 2020, you welcomed a 4th generation of Carlanders to the bank. Would you give us a brief history of the bank and the Carlander relationship with it?
Mr. Carlander: The State Bank of Faribault was established in 1919. My grandfather, John Carlander, was a federal bank examiner for the Federal Reserve 9th District, and he arrived here after he was courted by the ownership group of the bank. Over an extended period of time, my father and my grandfather acquired 100% of Faribault Bancshares, Inc., which owns 100% of The State Bank of Faribault. My grandfather came here from St. Peter Minnesota, and he had one son, which was Richard J. Carlander. I am the oldest son of Richard, so I became the 3rd generation to be President of The State Bank of Faribault in 2003. My grandfather was President and Chairman of the Board from 1938 to 1968. Then he was the Chairman of the Board from 1968 to 1984, when he passed away. My father passed away just over 2 years ago, in June of 2021, so we are now down to myself, my sister Kimberly A. Koepke, and my brother Matthew C. Carlander. They manage our 2nd branch, which is in Prior Lake, Minnesota.
We also now have my sister’s 2 children, Chad R. Koepke and Lauren E. Koepke. Chad and Lauren graduated from the University of Minnesota school system at Duluth and Mankato, respectively. Chad continued for his master’s degree at the Carlson School of Management. He worked for Wells Fargo prior to joining our team and is slated to be the next CFO of the bank. He is currently being mentored by Clint A. Rehtmeyer, who is currently on our Board of Directors, a member of our Asset Liability Committee, and has been here for 30 years. Lauren works in the retail side of banking at our Prior Lake branch. Then I have three daughters, and my middle daughter, Madelyn L. Carlander, has decided to join us. She is a graduate of Iowa State University, and she wants to work on the lending side of the organization. These are 4th generation Carlanders.
CEOCFO: Would you tell us how long you have been with The State Bank of Faribault, about your role and how it developed to where you are today as President and CEO?
Mr. Carlander: I started working for the bank while I was in high school and have been here 40 years now. My job was to pick up my grandfather. I used to bring him to work, take him to lunch, bring him home after work, and other duties that included cleaning bathrooms and watering flowers. I have done every possible duty as it relates to banking, basically starting in the basement and working my way up.
CEOCFO: What are some of the changes you have seen over the years?
Mr. Carlander: You cannot believe how it has changed! It used to be so busy in the lobby with customers, especially on Fridays. It would be one after the other, all day long! From eight o’clock in the morning till 6 o’clock at night, as fast as you could get them in and out of here! In today’s world, it is maybe a third of the customers that we used to have that come through the lobby, because of technology.
CEOCFO: Would you tell us about the growth of the bank and how you got there?
Mr. Carlander: We are a $300 million dollar bank today. It has taken quite a few years to get to that level, but it has all been organic. We have not purchased any other banks. We have developed the business here in Faribault Minnesota. Prior to Covid we decided that for us to continue to have organic growth we needed to go outside of Faribault, and that is when we decided to go to Prior Lake and open a branch. In that branch, we started with absolutely zero assets. That branch is in its 4th year of business, right now. It is finally becoming profitable, but we just felt that their community was very similar to our community, and with time we would fit in, and they would accept us.
We were barely open and running in Prior Lake when Covid hit. Then we were not allowed to go out and call on customers to introduce ourselves, which typically a community bank would do, and explain to them that we are here to help, and we care, and we want to be part of the fabric of the community. Therefore, we were handcuffed for about 2 years out of the 4 years we had been open, to acquire and establish relationships up there.
CEOCFO: You have a plastics manufacture in your local area, hotels, some Ag or farms. Would you tell us about the businesses in your community? Which industries would you say are the backbone of the community, providing jobs and community development?
Mr. Carlander: Faribault, back around the 1900s, was considered the “Athens of the West.” There was a book written about it. We have a history of diverse occupations in our community. We had shoemakers. There was, and still is, blue cheese made in Faribault. We also had our own brewery, Fleckenstein Beer, here as well. As our community has grown to approximately 30,000 people now, we’ve seen the wide assortment of work opportunities continue. One of the best employers in our community is the state prison, which is basically an offshoot of what used to be the Faribault State School and Hospital. As time went on, they outsourced these clients and that facility became vacant, and therefore a target for this prison, which has been a wonderful asset to our community.
The demographic of the customers we service is primarily individuals that have $10 million in sales or less and are privately owned. They could be considered a ‘Ma and Pa’ shop. Therefore, we target and identify well with locally owned and locally managed small businesses. We do not chase the Walmart’s of the world who are in our community. We gravitate away from them because it really becomes a service orientated business where you can get the desired products at any banking institution. The only way that you can capture customers and retain customers is by doing a better job than your opponent in satisfying their needs. If you do not, they will just go across the street, they will go where they can get it.
CEOCFO: Is there a big Ag community in Faribault?
Mr. Carlander: Faribault is a strong Ag community, just like Prior Lake. We are surrounded by agriculture, and those people need our services, and will continue to need our services. We are not going to wean away from being an agricultural community. However, Faribault is becoming more of a suburb of an outer ring of the metro, and of course Prior Lake is much closer in proximity to the metropolitan area. I believe people are migrating out of larger cities as there is more bang for their buck in the suburb areas of Minnesota.
CEOCFO: What are some of the challenges that you face in reaching the Ag community? Would you tell us about your lending team and what about them enables them to be successful in the markets you serve?
Mr. Carlander: There is myself and then I have a gentleman by the name of Henry D. Schutz, who is also an agricultural lender. There is no better way to approach and convince an Ag customer to become a customer of The State Bank of Faribault than if you walk in their boots, and I do! I have personally farmed 500 acres. I have raised corn, soybeans, alfalfa, and I have a cow and calf operation. Therefore, when I go to call on these customers I dress like them, I talk like them, I am one of them. You cannot take a college kid out on the farm if he has no background, and he is sitting there looking at the equipment, and he might be looking at a field cultivator and not even identify what it is. He might think it is a chisel plow or another piece of farming machinery. Therefore, these farmers, as they continue to get larger, need someone that can identify with them and has walked the same path that they have.
Those people are not easy to come up with because these farms are becoming a corporate operation. Finding young individuals that have an Ag background is very challenging. It is probably one of the most desirable positions for a community bank, to find someone that could help them grow their Ag portfolio, because it is all about buckets. We have buckets where we can do consumer truck loans and we have buckets where we do consumer camper loans. We have buckets that we do Ag loans in, so you want diversity. You want to fill these different buckets, so that if something goes wrong in a banking sector, you do not have all your eggs in one basket, so to speak.
Technology is critical for these farmers. It is critical for any customer now days. They want the convenience of banking on the phone and banking at home. They see the value in that, so we have to keep up with that. We are, by no stretch of the imagination, a leader in technology. That is for the big boys like Wells Fargo and US Bank. However, you let them roll it out and then you ride on their coattails, and then do a better job of offering the product and understanding it for your customer base. You have to have these products, or you will lose your traction in the marketplace if you don’t. However, we do not have the resources or the dollars to develop the products. No community bank does!
CEOCFO: Where do you see your growth coming from?
Mr. Carlander: We cannot lose sight of the fact of our history, that we are from Faribault, this is where we originated. We have to continue to work this market, whether it is door by door, shaking hands, or using technology. However, we do have to branch into other communities. We are just a big fish in a little pond down here in Faribault Minnesota. We want to be a little fish in a big pond, and that means the metro area, south, southwest, and western suburbs. I see that is where our growth pattern will come from, south metro and then moving up the west side of the metro. We are limited by going east because of Wisconsin.
CEOCFO: Do you see adding branches. As you grow, will it be through acquisition or de novo, or a mix?
Mr. Carlander: At this point, I see us growing by branching and then starting with nothing, like we did at Prior Lake. I do not see us purchasing other financial institutions in order to acquire growth. Now, when I say that, I am talking in a 20-
We like slow organic growth that we can manage with our team. It would be very difficult for us to go and buy another financial institution say $300 million and have the resources, one, to do it, and then the expertise onboard to accomplish that. For us, that is not going to work.
CEOCFO: I notice that on your website you have Twitter, LinkedIn, and a Facebook page. Do you have a marketing person that does this? How does that work within your scope of an organization, and is it for community relations or to help with sales and marketing?
Mr. Carlander: I have a full-
CEOCFO: Why is community involvement important?
Mr. Carlander: I think the main reason is that we have been here since 1919. We support and give back to the communities, which in relationship supports us. There is nothing better than somebody saying, “You need to go down to The State Bank of Faribault, and you need to see John Carlander. That guy will take care of you!”. Then when you do that and you provide that service and you continue to do that, I have been doing that for 40 years, you build a reputation where the marketing component doesn’t necessarily have to come from Google or some other search engine. It is done the old-
CEOCFO: Word of mouth is huge?
Mr. Carlander: Right! However, it is a combination. It is not only that, but it is technology. I like to say, “Our interest is you and we make dreams come true.” I use that all the time.
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