Change is never easy. So when Jeff Burzinski, chairman/CEO of Community Bank Corporation began to explore the possibility of creating a partnership with another bank, he was understandably emotional.
“It’s hard to transition to the next phase and let go,” he explained. But when Burzinski found a bank that mirrored his own so closely, it was “almost too good to be true.”
Last week, Community Bank Corporation, which operates Community Bank Chaska and Community Bank Chanhassen, announced a merger with Charter Bankshares, Inc., the parent company of Charter Bank Eau Claire in Wisconsin. The merger will allow the local bank to increase its ability to deal in larger loans and should also encourage further expansion in the southwest metro. But Burzinski is most proud of how the agreement will allow the bank to continue its mission.
“This should allow us to continue to serve the community as we have the last eight years,” he said. “We just needed a financial partner to go to the next level.”
Burzinski said they hoped that partner would share its mission, vision and values. After narrowing down the list of potential partners from 35 to 20 to 5, Community Bank forged a relationship with the Eau Claire bank.
“Their annual report looks just like us,” he said. “And they’re involved. They caught our eye from their history to their operating philosophies.”
Burzinski said it didn’t hurt that they also shared meager beginnings.
“Charter Bank started out of a construction trailer in 1980,” he said. “We joke that they only had a single-wide trailer while we had a luxury double-wide.”
Burzinski said the notion of partnering with another bank was originally the result of a failed deal. “A very good customer, one that we knew for a long time, needed a $10 million line of credit,” Burzinski explained.
“We needed a participation agreement (with another financial institution), but couldn’t get the deal done.”With a $2.6 million legal lending limit, Community Bank had previously sold off many of its larger loans. Under the merger plans, the bank’s lending limit will rise to $12.6 million.
“Now we’ll be a player in the market,” said Burzinski. The merger will also allow the bank to expand its operations. Burzinski said that they have been looking for a location in Waconia for a couple of years and also have their feelers out in Eden Prairie and Shakopee.
Expansion isn’t in the cards for many banks these days, with the foreclosure crisis and credit crunch dealing major blows to bottom lines, but that isn’t the case for Community Bank Chaska.
According to Burzinski, out of its $105 million loan portfolio in Chaska, the bank saw a loss of only $20,000 in 2006. The net loss average on a similar $105 million portfolio would be about $111,000.
“Just to be average, we have to be right 99.8 percent of the time,” said Burzinski. “But we were right 99.98 percent of the time.”
Burzinski said their strength is in understanding how to make and underwrite loans. “We know the players in the market, we know where the bones are buried,” he said.
That has helped the bank grow faster than U.S. Bank, Wells Fargo and Klein Banks, Burzinski said.
“We’re making loans to our friends,” he said. “We work together and we don’t take advantage of each other.”
While Community Bank understands that it will never be able to compete with the big banks in terms of technology and the amount of products offered, Burzinski said that they take pride in the customer intimacy they enjoy. “We have a 97 to 98 percent customer satisfaction rating,” he said.
Burzinksi expects that won’t change with the merger. In fact, he expects few changes as a result of the new partnership.
“It’s a win-win for everybody,” he said. “Our management all stays in place, our employees all stay in place and our board stays in place.”
The merger still has to be approved by the shareholders, but if everything goes as planned, it should be legal by July 2008.
-Mollee Francisco, staff writer