CRE expertise highly valued at Minnesota community bank

Greg Ebert

Editor’s Note: Bank directors need to be the kind of people who not only know their banks, but also have an eye for the trends and opportunities that will help their banks stay relevant and grow while balancing risk. It’s a tough job, and this year’s five Amazing Outside Directors have demonstrated their ability to rise to that challenge. This is one of five profiles to be posted on BankBeat. We recognize and thank our Amazing Outside Directors program sponsor Eide Bailly for its support.

When Steve Huston, president and CEO of Bankwest, Rockford, Minn., invited Greg Ebert to join the bank’s board, Ebert responded in a way that could have been construed as self-serving. “I asked him, ‘What’s the upside for me?’” Ebert recalled. It wasn’t that Ebert, owner of Ebert Construction based in neighboring Corcoran, wasn’t community-minded. He simply knew that participating on a bank’s board introduced him to risk and brought with it a time commitment many business owners cannot absorb.

But Huston had prepared his pitch. He told Ebert the bank was coming off a time when earnings were good, asset quality was good, and bank staff was stable. It was late 2007 and Huston said he was “honestly upbeat about the future.” Huston’s optimism wasn’t unfounded. The bank would end that year with ROA and ROE at 1.02 percent and 10.82 percent, respectively. Huston closed by telling Ebert it would be a pretty exciting time to come onto the board.

Neither of them could have predicted what was about to befall the industry.

BankBeat is honoring Ebert as an Amazing Outside Director for 2018 along with four other directors.

Ebert Construction was formed in 1968 from the ashes of a burnt horse barn on the Ebert family farm. Instead of immediately buying the lumber he needed to rebuild, Ebert’s father, a man with an entrepreneurial dream, put his $6,800 insurance payout toward a tractor with a post-hole digger, a pickup truck and a trailer. Greg Ebert was 12 when Jack Ebert started his ag-focused construction business. Ebert joined his father’s business right out of high school in 1974; he worked as a carpenter. Ebert was only 25 when he purchased a half-stake in his father’s company; he’d barely turned 30 when he first approached Jack Ebert about the elder’s exit strategy.

Ebert had the ambition to build the business. Father and son found a way to make the transition happen while the company was still small. It logged its first million dollar year roughly five years later.

With a second generation at the helm, projects shifted focus. Agricultural construction diminished while commercial business grew. Today, the company builds educational facilities, municipal buildings, jails, and some retail projects. It employs 80 people with annual revenues approaching $65 million.

Ebert met Huston over a Rockford land deal a few years before Bankwest decided to break ground on a new home office. Ebert Construction was on Huston’s short list of potential contractors. “We wanted a contractor large enough to work with our architects in a meaningful and professional way,” Huston said. Ebert’s firm met all of Huston’s criteria.

Construction at Bankwest included a geothermal heating system and a rainwater retention system to keep runoff from flowing into the nearby Crow River. “Greg’s firm and his people were able to handle these complexities,” Huston said.

The invitation to join the board came after construction was completed. Huston was attracted to Ebert’s business abilities, but even more so to his integrity and reputation in the community. “We felt that he had the values that lined up with our values,” Huston said.

The tough years came like a torrent. Like many community banks, by the end of 2010 Bankwest was accumulating troubled assets. Its ROA and ROE were negative 1.15 percent and negative 15.25 percent, respectively. “In the middle of the crisis, people would ask if we changed our underwriting or our down-payment requirements,” Huston said. “I had to say, ‘We have always felt like our underwriting was sound but when real estate values drop 50 percent, our 20 percent down requirement is meaningless.’”

Ebert, true to his reputation, applied his decades of experience in commercial construction toward analyzing a growing list of troubled loans. He invested more hours than might be considered reasonable, even skipping family vacations to attend an audit or executive loan committee meetings. “Like anything else I do, when I became a director, I took a big interest and became very involved in distressed properties the bank owned,” Ebert said.

“You don’t expect this type of commitment from an outside director,” said Craig Boysen, the bank’s executive vice president. Boysen said Ebert consistently makes himself available to lenders for site visits on commercial loans and advises them on how to structure deals.

During the most difficult years, Ebert frequently voiced his opinion about loans he thought the bank shouldn’t make. On deals that had gone south, Ebert urged management to cut its losses. His pragmatism has served them all well. “It’s what I bring today and it’s what I brought then,” Ebert said.

Both Huston and Boysen credit Ebert for helping the bank navigate its turn back to high-performance. The bank has done more than recover. At the end of 2016, it reported enviable ROA and ROE at 1.58 percent and 17.46 percent, respectively.

“His advice through the committee process has helped us underwrite and make better quality loans and set up appropriate structured terms in part of the process of improving,” Boysen said.

“When you look at his knowledge of the market and of construction types … he knows the lifetime expectancy of a building and will say ‘Here’s how I would look at that in terms of the building’s value compared to this type of construction.’ All of that inside knowledge he is so willing to share,” Boysen said. It’s a commitment Boysen calls exceptional.

Huston credits the 61-year-old Ebert with helping the bank tweak some aspects of its underwriting and set up thresholds for approvals, all things Huston said are serving the bank well. “Greg’s had input in all those areas.”