In the community of Fond du Lac, Wis., where the average temperatures range from a low of nine degrees Fahrenheit in January to a high of 81 in July, it’s temperate in all seasons inside Horicon Bank’s branch.
That’s because of a cooling and heating system that draws geothermal energy from far under the ground.
Horicon Bank gets its name from Horicon Marsh, a popular birding area named a “Wetland of International Importance” by the Ramsar Convention of the United Nations. So, the bankers behind the name have worked to make the brand not just about its logo of a Canada goose and tagline calling it “the natural choice,” but to add some sustainable features.
“It just made sense to really lean into that brand,” said Fred C. Schwertfeger, president of the $1.3 billion bank.
The Horicon-based bank estimates that it has taken roughly 10 years to recoup geothermal energy investments. While the bottom line is something all banks consider, this one usually doesn’t need to worry about heating and cooling costs at three of its Wisconsin branches.
“To me, personally, it’s important,” Schwertfeger said. “I think banking is a conservative industry, and so the discourse on the subject may range, but I think it seems like the wise way to plan for the future, considering everything. And it just feels right.”
Geothermal energy might be harder to understand, given that it’s not as mainstream, perhaps, as other green technologies such as solar panels or electric vehicles. It uses heat from below the earth’s surface, according to the U.S. Department of Energy, with these reservoirs of hot water accessed through wells that are a few feet to several miles deep. It’s considered a clean, renewable power source.
The first Horicon branch to harness geothermal energy was in Fond du Lac in 2006, followed by Oshkosh in 2013. In 2015, Horicon Bank purchased another bank and with it came a branch in Fond du Lac that already was using geothermal energy.
Despite the time that has passed, “it probably hasn’t hit a tipping point where it’s thought of as [a] top-of-mind energy conservation technique,” Schwertfeger said.
For the Horicon branches, geothermal energy provides both heating and cooling with a system that looks the same as others above the surface. Among the advantages of having it are “no carbon emissions. That’s a big one,” Schwertfeger said. It’s also a bit more reliably efficient, he said.
The bank is now building a new branch in Wauwatosa — bringing its branch total to 24 — but is installing solar panels instead of digging geothermal wells because it doesn’t own the land. “We are still continuing with green, energy-efficient thinking in our new building,” Schwertfeger said.
A downside to geothermal energy includes some “space complexities,” Schwertfeger said. Another negative is the high upfront cost. It’s like paying in advance for your heating and cooling for a decade, said architect John Cullen of Cullen & Associates, LLC, in Pittsburgh, Pa., which designed the buildings.
“Natural gas prices have dropped. And then also conventional furnaces have become more efficient, so it’s becoming more difficult at times to justify geothermal … but if you want to be green, that’s the way you’re going to go,” Cullen said.
Another issue can be property size. “If you have a lot of property, you can actually dig trenches down 10 feet and lay all the tubes in the bottom of a trench. Whereas if you’re on a tighter property you drill wells,” Cullen said.
The Horicon branches have a supplemental electric system in case of particularly inclement weather, though the geothermal energy covers the bank’s needs about 95 percent of the time, Cullen estimated.
Natural Resource Innovations in Mayville, Wis., does environmental consulting for Horicon Bank. That includes planning natural and native landscaping at the bank branches, such as flowering species that benefit pollinators and food species for birds and humans.
NRI President Andy Nelson said he is seeing more midwestern businesses showing interest in green energy resources, solar in particular.
“Geothermal is a very efficient energy option, but it does have some higher front-end costs, which can limit interest,” Nelson said. “For many companies, these costs could be a barrier to adoption as it can be hard to make long-term investments when business can be so challenging in the short term.”
As Federal regulators mull the addition of environmental factors to their assessments, bankers may need to consider these questions more. Michael Hsu, acting Comptroller of the Currency, has said any potential policies from the agency he oversees would apply to only the largest banks. The Federal Reserve is currently considering a policy which would also hew to the $100 billion asset cutoff, but some trade groups have expressed concern about possible spillover effects for smaller institutions.
Horicon Bank isn’t waiting for a regulatory dictum to act on climate change concerns, however, and Schwertfeger sees other benefits as well.
“Especially when just running branches is scrutinized, from an expense standpoint, we’re grateful for that investment,” he said.