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If the banking industry ever hopes to banish from the public psyche the notion of bankers as cold-hearted, steely-eyed types, it should trot out Mike Grove as Exhibit 1.
The president of First National Bank, White Sulphur Springs, Mont., the only financial institution in Meagher County, has a ready smile and a genuine interest in people as he makes the rounds of his market. His red Chevy Blazer with the license plate "FNB" is a familiar sight both downtown and at the remotest farms and ranches where driving off-road is how you get there.
Bank duties keep him indoors more than he would like, but Grove loves to get out and see customers where they live and work. Just before the holidays, for example, he spent part of a Sunday delivering poinsettias to customers, despite the snowstorm shown on this month's cover.
Consider, too, that Grove is one of the few outsiders with entree to the Hutterite community near White Sulphur Springs. A religious sect, the Hutterites tend to be suspicious of outsiders, but Grove is trusted and always welcome (see accompanying article).
Serving the financial needs of an entire county is a full-time job, but last fall, Grove took on another job. He became chairman of ABA's Community Bankers Council, a group of about 100 community bank presidents and CEOs that provides regular input to ABA's lobbying efforts, and develops products, services and information to assist smaller banks. Of his chairmanship Grove says, "It's not like I needed another job, but I really believe in the importance of the ABA and I'm real bullish about community banking.
"Clearly the total number of banks is dwindling," he says, "but a lot of community banks are being started. Community banks are absolutely going to be a viable part of the future, we just have to find ways of balancing personal service with becoming more efficient through technology."
The examiner who wouldn't leave
Grove was a logical choice for the ABA post. Not only does he have more than two decades of banking experience, he also spent five years as a national bank examiner. The native of Astoria, Ore., graduated from the University of Oregon with a degree in economics, and after attending a banking program at Harvard, joined the staff of the Office of the Comptroller of the Currency in 1968. While with the OCC Grove participated in field examinations in Oregon, Washington, Idaho, Montana, Oklahoma, and Alaska. He even traveled to the Orient for four weeks in order to examine Citicorp branches in Hong Kong and Taipei.
"My role as a bank examiner was excellent training for becoming a banker," says Grove. "I discovered all the different ways that banks have of doing the same job."
Even as an examiner, Grove was an affable fellow who generally was welcomed into banks. At least that was the situation for Robert and Thelma Johnson, who owned First National Bank during the time when Grove examined it. During an exam in 1973, the bank's senior manager unexpectedly resigned leaving the Johnsons in a quandary. Grove was assigned to monitor their progress in finding a replacement, and after one of his follow-up visits, the Johnson's asked him if he would be interested in the job himself.
He was, and with financing offered by the owners, Grove purchased a controlling interest in the bank. By so doing he became, at the age of 29, the youngest bank owner/president in the country at the time.
Grove currently owns 90% of the holding company (which owns 80% of the bank). "It makes me have a real commitment to the community," he says. "I live here; I invest here; my future is wrapped up here."
Putting nature to work
White Sulphur Springs might now be the Colorado Springs of Montana had John Ringling's plans worked out. The circus impresario built a railroad line into the town and planned to build a $1 million hotel there in 1917 to take advantage of the area's hot springs. The hotel was never built, but the hot springs remain. (Continued on p. 43)
Grove capitalized on this natural feature in a slightly different manner than John Ringling had in mind. In 1978 he constructed a new building for the bank in a spot where he could easily tap the hot spring as a heat source (the spring underlies most of the downtown area). The water comes into the bank at 125 degrees Fahrenheit. Through a system of pipes and coils, it provides the bank with 90% of its heat.
As it exits the bank, the spring water is still a steamy 116 degrees, so Grove arranged to have it piped to a local motel where visitors can enjoy the benefits of spa with water not unlike that of the famous spa in Baden Baden, Germany.
Geothermal heat isn't the only unusual feature of Grove's bank. He and a local architect designed the entire structure in a classic ski-lodge style with dark wood external beams. The rustic look complements the area's natural beauty and appeals to the bank's customers. The town, surrounded by four mountain ranges, boasts numerous recreational attractions, but the county overall is still heavily dependent on agriculture.
Almost half of First National's loans go to the county's cattle ranchers and wheat and barley farmers, while another quarter are tourism-related.
Although cattle prices remain stagnant at best for Montana ranchers, tourism has gained momentum. Dude ranches have sprouted across Montana offering upscale clientele a few days of fishing, hunting, horseback riding, and swimming or skiing. In addition, Montana's reputation as the state of choice for celebrities is growing. Ted Turner, Peter Fonda, Brooke Shields, Meg Ryan, Tom Brokaw, and Michael Keaton are just a few of the "names" who own homes in Big Sky Country.
That clientele helps to offset some of the negative publicity the state sometimes gets. "It seems like whenever Montana is in the press, it's because of people like the Freemen or the Unabomber," says Grove.
Bank as supermarket
Grove is a strong advocate of ABA's Strategic Alliance for the Future and its aim to expand the products and services that banks are allowed to offer. He hopes his customers will come to see his bank as a financial supermarket where one stop is sufficient to get any financial product or service they need.
First National has already moved in that direction. Grove currently acts as the bank's licensed insurance agent, for example. Customers may go directly to him to buy life and medical insurance. With last year's Supreme Court ruling expanding banks' insurance powers, Grove is excited about the prospect of adding commercial hazard, homeown-er's, and auto insurance to the bank's list of products.
"We are currently looking at all of the different options," says Grove. "The insurance companies may want to partner only with the large banks, but if the smaller banks band together we could be a force to reckon with in the insurance arena."
He is hoping to launch a debit card program in 1997 and is looking into having his bank act as a real estate broker in the future. First National currently participates in the Business Manager Program offered by ABA's Corporation for American Banking. The program, which allows community banks to offer merchants receivables financing and statement processing, generates a steady stream of fee income for the bank. It's particularly effective in White Sulphur Springs where many merchants offer charge accounts.
Montana was one of the last states to grant permission for banks to branch. So banks there are still excited by the growth potential branches offer. A year and a half ago, First National Bank opened up a branch in Clyde Park, a town of 400 located about 50 miles south of White Sulphur Springs. The branch cost $250,000 to construct, currently has $4 million in assets, and has great growth potential, according to Grove. He and his six board members remain open to the idea of opening additional branches in the future.
Running the ship
Grove admits that rural America isn't fertile ground for finding experienced bank personnel, so he must train most recruits in the rudiments of banking. Sending staff for off-site training is costly, so Grove makes ABA's Skylink programs required viewing for his small, but loyal staff.
He also has devised an interesting way to keep the bank in compliance. Employees are assigned a regulation that they are required to research and monitor. They complete a checklist on the bank's compliance with the regulation, explain any exceptions at the bottom of the sheet, sign it, and return the list to the compliance officer who checks the work and makes a presentation to the board.
The employees also are expected to make a summary presentation to other employees at one of the bank's weekly staff meetings. Grove says they try to cover each major reg at least once a year.
First National employees, officers, and directors benefit from the bank's strong performance. Grove set up a bonus program based on the bank's return on assets. Above a floor of 1.00% ROA, bonuses are granted.
"We've been doing this for three years, and we have noticed a big difference," says Grove, whose bank had an ROA of 1.60% at yearend. "All the employees pay a lot more attention at our staff meetings now, and we have received many good suggestions about how to make the bank more efficient."
Council goals for '97
With the new Congress officially just a month old, already there are signs that bode well for community banks, Grove says. Bills introduced by Representatives Leach, Roukema, Baker and others address items that are high priorities for the Community Bankers Council and ABA as a whole, he notes.
Legislation that the council hopes will move quickly includes changes to the Federal Home Loan Bank System, which would result in greater bank participation, and a merger of the bank and thrift charters. One big victory came early in the year when the Farm Credit Administration withdrew its proposal to expand the lending authority of Farm Credit System member institutions.
Though Grove's bank has no nearby bank competitors, that void is more than made up by an aggressive Farm Credit unit in nearby Bozeman, Mont. He and many other ag bankers have been actively involved in keeping a tight lid on the expansion of these government-backed lenders.
An equally strong interest for Grove is rural development. "It's very tough to be a businessman on Main Street," he observes. As former chairman of ABA's Agricultural Bankers Division and a member of ABA's Rural Economic Development Task Force (now an informal working group) Grove has for some time been working for "a strong, continuing Congressional interest in ways to enhance rural development."
The group is working to increase community bank access to the secondary markets. Last year, legislative changes improved Farmer Mac, the Federal Agricultural Mortgage Corp., Grove says. His bank uses Farmer Mac's programs extensively and Grove hopes other banks will reconsider the revitalized organization. ABA's rural development group also is working to open up bank access to the Farm Credit System.
On another front, Grove is adamant that the various banking trade organizations should join together to force credit unions to adhere to a common bond, as required by law. Even in his isolated market in Montana, Grove competes with the public employee credit unions based in the state capital of Helena, about 70 highway miles to the west. He is hoping that ABA's recent victories will force credit unions to limit their membership.
"The credit union industry is gearing up for an all-out, take-no-prisoners battle," says Grove. "This could be the year that Congress is forced to address the credit union issue whether it wants to or not." In addition to membership issues, Grove says Congress should also scrutinize the tax subsidy credit unions enjoy. "In Montana, the subsidy amounts to a 1.5 percentage point rate advantage on both loans and deposits. That's a substantial edge," he says.
Global connections
Grove's friendships extend beyond the local Hutterite community, all the way to Russia. In 1992, FNB participated in the Russian-American Bankers Forum and hosted two visiting Russian bankers who were trained on the operation of an American bank. With the cooperation of the local Meagher County Public Television station, a video was made which has since been used extensively in Russia to educate other Russian bankers.
For a portion of their visit, the Russians stayed in Grove's home, where they were treated to Western hospitality by Mike's wife Laurie and met three of his four children: Anton, Danielle, and Michael. The eldest, Jon, lives in Chicago.
The Groves remain close friends with one of the bankers, Sergey Moisseev, who is a regular attendee at ABA's annual conventions. Meanwhile, Mike Grove has witnessed firsthand the evolution of Russia's banking system this decade.
"They are very bright people that are going to make it," says Grove. "They will leapfrog and go from no private banking system to a state-of-the-art banking system. It's important to do what we can to help Russia's powerful economy evolve as much as possible like our own. It's better to have friends than enemies." Helping and befriending are concepts Mike Grove understands well.
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