Where others topple down, Stockman stands strong

01_bnsf-479UP IN THE CLOUDS  — Hayden Tower Service of Topeka, Kan., brought in a crew to relocate the radio tower that was just off of 4th Ave S.W. by the railroad tracks.  It was moved to the north side of the Depot Building on Front St. The tower was moved to allow BNSF to upgrade their communications. The tower alone is 150 feet high with a 20 foot antenna on the top. The width of the top of the tower was only about 12 inches wide.  I-O Photo by Barb Endler

By Buck Traxler, I-O Editor
If you have read or watched any news over the past couple of years, you couldn’t have missed that many banks have taken a tumble.

Go back a few years to 2007 and there were just three failed banks that year. The following year that number climbed to 25 and the handwriting was on the wall.

With the collapse of the housing market and the increase of mortgage delinquencies and home foreclosures, not to mention a credit card crisis banks began to close their doors at an alarming rate.

In 2009, the number of banks closing exploded upward to 140 and already this year, 42 banks have failed bringing the total number up to 210.

The total assets of the failed banks are $570+ billion and loss to FDIC’s is $58+ billion, numbers that are just too big to comprehend.

Stockman Bank is FDIC insured (Federal Deposit Insurance Corp.), protecting depositors in a number of accounts that include checking, savings, and certificates of deposit to name a few.

Depositors are covered on these interest bearing accounts up to $250,000. However, a husband, wife and two children may have insured accounts up to two million, a husband, wife and one child could have an insured account up to $1.2 million and just a husband and wife may have insured account up to $600,000.

No one part of the country is immune to seeing a bank fail.

They are dropping like flies coast-to-coast from South Carolina, to Florida, Georgia, Arizona, Nevada, Washington, Minnesota and Illinois just to name a handful of places.

So what happens in a bank failure? Bill Coffee, the Chairman and CEO of Stockman Bank tells The I-O, that “Unfortunately the burden of picking up the tab for those banks that did not play by the rules and are failing does not go directly to the U.S. taxpayer but to those banks that played by the rules, like Stockman.”

He went on to add, “In order to meet the drain on reserves due to bailing out or closing failed commercial banks, under the newly enacted rules, FDIC member banks are now required to pay premiums three years in advance. This costs bank capital that would otherwise be used to make loans and rebuild the economy.”

It is interesting to note that in this time of recession and bank closings, the Federal government has made special assistance available to many banking institutions. However, Stockman Bank has refused any form of assistance.

Along that line, in letter to customers and shareholders in an annual report brochure, Coffee wrote; “Our foundation of conservative lending practices, efficient operation, unsurpassed customer service and strong capital have helped us achieve solid growth over the years. Our commitment to these foundation principals clearly sets us apart from other financial institutions.

That all goes back to the beginning when William Nefsy bought the controlling interest in the Miles City Bank in 1953. His focus then was on the community and Ag producers. Today, that principal continues.

Coffee offered up a number of reasons that make Stockman Bank so solid in these volatile times of banks failures.

First and foremost, he simply noted that Stockman Bank avoided most of the issues facing our competitors by sticking to our foundation principals.

A number of them are: “Our savvy staff simply avoided many of the bad loans, shoddy practices, and weak controls plaguing other lenders, and we serve hard-working Montanans – most of who handled their financial affairs responsibly and continue to do so.”

He noted as well that the bank is a “relationship” company, not  “transaction” based like most financial service providers.

“Building relationships is a multi-service, multi-year proposition that is built on trust from both sides.”

“Our general business and lending philosophies have been developing since 1953, 57 years, “We don’t weaken when things are good or over correct when the economy turns. Likewise, we don’t jump into and out of lines of business. This consistent approach allows our customers to anticipate our moves and us theirs.”

The CEO is also quick to point out that diversification is important to the bank’s stability.

While many customers may not realize it, Stockman Bank serves the entire state, not to mention the bordering areas of Wyoming and North and South Dakota.

This area is roughly equivalent to the size of the northeastern corner of the U.S. (from Washington, D.C. to Ohio).

If one part of Montana has a drought (in the weather sense or an economic sense) the likelihood that another part of the state has better conditions is great.

Their Ag presence coves many forms of crops and livestock, virtually every form of agriculture produced in the Big Sky.

“Moreover,” he adds, “the communities we serve are equally as diverse. We serve many of the thinnest populated areas in America to the largest city in Montana. Our customer mix includes all forms of businesses, real estate, Ag producers and the broad spectrum of consumers found in the state.”

Key areas to measure a bank’s financial stability are the capital and risk based ratios.

Coffee explains that these rations illustrate the soundness of the bank and its ability to grow, fund expenses and/or absorb loans that go bad. The overall trend for these rations for banks in the region are down, but the levels are better for  banks in Montana and North Dakota  compared nationally and also nowhere near the lows of the 1980s – an era marked by economic turmoil.

The head office bank is now located in Billings. In all there are 22 banks bearing the Stockman name with over 400 employees to serve Montana and the surrounding border-states making it the fourth largest Montana bank.