Fargo, N.D.-based Gate City Bank is crowning its centennial with an expansion into Minnesota’s Twin Cities market. The $3.4 billion bank is pairing it with a record-setting donation that exemplifies its commitment to the communities in which it operates.
The new branch, in Elk River, Minn., roughly 35 miles northwest of Minneapolis, opened in June and shares a building with the grocery store chain Coborn’s. The branch is the $3.4 billion bank’s 44th in approximately two dozen communities in North Dakota and Minnesota. Gate City Bank already had employees based in communities north of the Twin Cities region who were looking to move to the area.
“We do have a customer base that’s in the area, but we chose Elk River as a community to expand to because it has a great community fabric that our culture aligns with,” said Senior Vice President of Retail Banking Ryan Coye. “It’s a community size that we can get involved in, make a big impact in, and also serve our customers that are in the area and continue to grow our customer base.”
Executives say Gate City Bank’s recent expansion shows the success of its community-focused, strategic approach to banking, which has ensured the institution’s survival through multiple crises over the last century. The culture the bank has built over the last 100 years has helped it build success which has earned regional and national recognition.
A century of service
William D. Gillespie established the bank in 1923 as Gate City Building and Loan Association in Fargo, N.D. Sixteen years later, nearly two-thirds of the 898 North Dakota banks that had been in operation in 1920 were closed as the Great Depression took its toll on local economies. Still, Gate City navigated both the depression and World War II, seeing significant asset growth in the 1950s and reaching $100 million in assets by the end of the following decade.
Gate City sought to expand beyond sparsely-populated North Dakota in the 1970s while opening 10 branches throughout the state. A mortgage subsidiary opened three offices in Utah while another offered loans for timeshares purchases in South Carolina. The initiatives proved unsuccessful, and Gate City eventually returned its focus to the Upper Midwest. By the end of the decade, the association had more than $500 million in assets.
In 1982, the board voted to switch to a federal thrift charter and was renamed Gate City Federal Savings & Loan. Two years later, it launched an adjustable-rate mortgage program as interest rates reached record highs.
“We got back into mortgage lending because realtors would tell their customers, ‘Don’t go to Gate City because they really don’t want to make loans’,” Board Chair Steve Swiontek wrote in a book marking its 100th anniversary. “And that was true. We came out with a one-year, adjustable-rate mortgage, 10 3/8 percent, one-year, fixed. The rate could only go up 1 percent per year and was capped at 15 3/8 percent. We were inundated with customers because, at that time, the 30-year was 21 percent.”
The potential for insolvency was a major concern for Gate City during the 1980s as the association lost up to $1 million per month in the midst of the S&L crisis. Higher capital costs paired with limited interest rate income on mortgages significantly depleted its capital. By the end of the decade, the bank was operating under a supervisory agreement
Gate City, the lone surviving S&L out of 11 in North Dakota, met with chief regulators to decide whether to remain in business. “One of our senior examiners at the time had built a relationship with us,” said former CEO Bob Anderson. “He went to bat for us. It was then that they decided to back away and let us have a shot at it, and it worked.”
Dedication to independence
A mutual bank, Gate City Federal Savings Bank resisted becoming a public company in the wake of the S&L crisis to maintain control over the institution’s character and mission. Staying independent was a vote of confidence in the vision of its leaders.
“It was always a conversation out there,” said Rod Larson, one of the bank’s directors. “We were all committed to remaining a mutual because we wanted to be a long-term fixture in the state. We knew — and it’s happened in other banks when they switched the ownership to a publicly traded bank that your future was unknown. Just looking at the bank today, that was the right decision.”
That choice played out well for the bank. It introduced a checking account offering in 1989 and within a decade was opening more than 7,000 accounts per year. It expanded across the Red River into Minnesota in 1997 with a branch in Moorhead. Three years later, Gate City Federal Savings Bank changed its name to Gate City Bank. It continued to expand in North Dakota and Minnesota as it launched a business banking line in 2001 with lines of credit and commercial real estate loans.
Despite being a prolific mortgage lender, Gate City Bank did not participate in the Troubled Asset Relief Program in the midst of the Great Recession. Only three of the 12,000 mortgage loans the bank serviced in 2008 were foreclosures. Today, it ranks first in the state for mortgages, both in total number and total dollar amount.
Executive Vice President of Retail Banking and Lending Kim Settel attributed the bank’s retail growth to evolving, self-serve technology platforms. Under Settel’s leadership, the bank has a fleet of in-house testers who evaluate products from the perspective of customers before they are unveiled.
Board members evaluate bank executives on how they are giving back to the communities they enter, not solely on how much revenue they have made. “The culture that Gate City Bank has created and fostered over the years, it definitely starts at the top down, and that has propelled the bank and all of its team members to continue growing at the rate we have,” Coye added.
That focus has paid off. Gate City Bank has been included in the Forbes’ list of World’s Best Banks for three straight years, claiming the No. 4 spot in the United States this year. The ranking, based on a survey of 48,000 banking customers in 32 countries, ranked 415 banks based on digital services, customer service, financial advice and trust. “It’s really exciting. Words almost can’t express how honored and thankful we are,” Coye said. “It’s a good reinforcement of the culture we built that makes us unique and special to our customers.”
Building community partnerships
Gate City executives say a key part of the bank’s growth over the years has been tailoring its products and outreach to fit community needs.
In February, the bank marked its 100-year anniversary by donating a record $100,000 to Moorhead, Minn.-based disabilities services nonprofit Creative Care for Reaching Independence. The donation was part of Giving Hearts Day, a 24-hour fundraiser for charities in North Dakota and northwest Minnesota. Since 2014, the bank has partnered with the fundraiser to donate more than $1.7 million. A debit card program co-branded with local school colors and mascots has netted more than $284,000 in total donations to the participating institutions as of early May.
In recent years, Gate City Bank opened three branches in the St. Cloud, Minn.-area through a partnership with Coborn’s, Inc., the St. Cloud-based parent company of Cash Wise Foods. Since the bank entered the St. Cloud region in 2020, employees have contributed nearly $80,000 in philanthropic giving and more than 1,600 hours of volunteerism.
Aware of the worsening child care shortage, Gate City Bank introduced low-interest child care business loans to help providers purchase equipment, cover necessary updates and hire staff. During the pandemic, Gate City Bank offered a 60-day moratorium on loan repayments and banned foreclosures and repossessions.