Grow Where You are Planted

Mick Guttau’s community-focused bank has become much more than a financial institution

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Mick Guttau learned one simple message while flying Cobra attack helicopters in Vietnam: “The troops come first.”

“If my wingman isn’t with me 110 percent, I’m dead,” Mick said. “That’s why it’s so important for him to know how important he is to me.”

“It’s just as true in a family or business environment as it is in the military,” he said. More than four decades later, Mick continues to apply that philosophy as chairman and CEO of Treynor State Bank in Treynor, Iowa. What-ever his “troops” are – his employees, his clients, or the community – they come first.

Thanks to Mick’s dedication to his “troops” – as well as careful planning and ethical banking practices – TS Bank thrived through the recent financial crisis, setting itself apart from other banks. Today, while much of the nation is still recovering, TS Bank is growing.

Survival skills
Mick grew up in Treynor – an agriculture-based community located 20 miles from Omaha, Neb., with a population of 1,000.    

Wanting to study agriculture, Mick attended Iowa State. He held leadership positions in Theta Delta Chi fraternity, ROTC, and Pep Council, and was even Cy.

Mick says the best thing that happened to him at Iowa State was meeting his wife, Judy (Frazier) Guttau (L)(’68 home ec. ed.). He was in love by their third date, and they married in 1968.

After graduating, Mick (L)(’68 farm operations) went to flight school and served one year in Vietnam, earning numerous awards including two Distinguished Flying Crosses.

When Mick returned home, he and Judy moved back to Treynor. They lived in a trailer house while he worked at TS Bank. Mick’s dream was to farm, but he continued to hit brick walls trying to acquire land.

Frustrated – and bored working at the bank – Mick finally decided to leave for a job in Omaha.

His boss, the owner of TS Bank, had another idea: “Just buy the bank.

After prayer and discussion with Judy, Mick finally agreed.

Despite the fact that he “hated banking” and “couldn’t stand being inside,” Mick says he realized what he truly wanted was to call the shots, take risks, and be in control – qualities he had in Vietnam and that appealed to him in farming.

“And I thought, I can do that in the bank,” Mick said.

His parents refinanced the family farm to help fund the purchase and in 1978, at the age of 31, Mick became the owner and president of the one-location, $8 million-assets community bank.

“I always say it’s because I didn’t know any better,” Mick said. “But it also took some courage.”

Soon after, the 1980s farm crisis hit. Already heavily loaned up and in debt, TS Bank was nearly destroyed. When the two nearest community banks closed, everyone was, according to Mick, “waiting for the new kid on the block to close, too.”

Mick still considers the farm crisis to be TS Bank’s biggest threat in his 35 years as owner. He credits the bank’s survival to community support.

“When we had difficult situations with farm families, those families worked with us to get through it in the best way possible,” Mick said.

TS Bank had only one bankruptcy during that time – a young man who walked into Mick’s office years later and apologized.

“He said, ‘I should have listened to you,’” Mick said. “And we’re friends to this day.”

As TS Bank grew, it quickly became a Guttau family business. Judy began marketing the bank and is now director of community reinvestment and secretary of the board. Their daughter, Heidi Guttau-Fox, an attorney, is on the board of directors. And their son, Joshua Guttau (L)(’99 animal science, MBA ’01), joined the staff in 2003 and assumed the role of president and CFO in 2007.

TS Bank expanded to include four branches and 75 employees. Recently, the bank earned recognition as a top workplace in Iowa for small businesses.

Through the decades, Mick says he never considered selling the bank. “I’ve had a lot of offers,” he said. “Not many lately, because I think people are aware that we’re committed and we’re growing.”

Historic opportunities
In 2007-08, the United States experienced an economic decline that led to the worst recession since the Great Depression. At the core of the crisis were the nation’s banks.

TS Bank was an exception – managing to not only avoid the financial crisis but to actually profit from it.

About two years before the crisis hit, the senior staff at TS Bank felt a recession heading toward them. They began to position the bank, relying on the experience of Mick and others who endured the farm crisis.

“They never changed their credit standards; they always held good-quality lending practices,” Josh said.

While other banks nationwide were “loosening the ropes” and giving risky loans, Mick refused to accept credit scores less than 660.

“We’d hear people say ‘you’re outdated’ or ‘you’re missing the boat,’” Josh said. “And 12 months later is when everything blew up and proved that the ‘old geezer’ was right.”

For Mick, it was about protecting the bank as well as protecting the clients.

“If it’s not a sound financial decision and a solid loan, it’s really not good for the community or for the borrower,” Mick said. “You’re doing a disservice by making them a loan that they shouldn’t have.”

He says they ensure that there’s enough cash flow and income being generated to service the debt, so their clients are never forced to sell the family farm or business.

“We never moved anybody off their farm,” said Mick, whose still lives on his own 135-year-old family farm. “My objective was to keep those people in their homes.”

Mick also wanted to protect the community.

“If [families] sell out, then they would likely move somewhere else, then we’d lose them in the community,” he said. “So the school, the churches, and the retailers start losing that family’s business.”

Mick and Josh didn’t dodge the financial crisis simply by avoiding risks, however. In fact, they sought out new opportunities.

“If you don’t take risks in a bank, you don’t make money,” Josh said. TS Bank just picked “different types of risks” within the bank.

Josh says most community bank presidents get their start as loan officers, so they tend to focus on lending. Josh’s experience, however, came from the trust department at First National Bank.

“I’m more interested in capital markets,” he said. So while other banks were putting their deposits back into loans, TS Bank was looking into investments.

“We made the bond portfolio a second focus of our bank,” Mick said. “So we have the loans; we have the bonds. We look at both of them in great detail and analyze them.”

Josh says this gave the bank a “second arm to the business,” instead of simply generating loans.

“It’s not just traditional banking,” Josh said. “It’s risk management; it’s finance management.”

When Lehman Brothers failed in September 2008 and the financial markets exploded, TS Bank was able to reposition
its balance sheet to capture what Josh calls “historic opportunities in the bond markets.”

“We had prepared,” Josh said. “Other banks didn’t take advantage of it because they didn’t have the systems in place to
identify the opportunity and manage it in an appropriate way.”

Those opportunities generated profits for TS Bank, which were put back into technology, employees, and facilities for the bank.

Mick and Josh don’t take all the credit for TS Bank’s success during the crisis. Neighboring Omaha had one of the most stable economies in the nation during the recession, which gave TS Bank an advantage. Josh says if they had implemented their same philosophy in a different city, the bank could have failed.

“So some of it is definitely geography or luck,” Josh said.

Mick adds that the majority of nearby banks are also doing “OK.”

“It’s just that there were opportunities offered in the financial crisis that we capitalized on,” Mick said. “We did better than OK.”

Community First
Today, TS Bank’s success is reflected on Treynor. The bank has become a central part of the community, reinvesting a great portion of its profits into local programs and organizations.

After Josh became president, he met Mick and Judy for lunch one day. While discussing how much of the bank’s profits should be given back to the community, they each wrote numbers on their napkins. When they flipped the napkins over, they had all written the same amount: 10 percent.

Each year since then, TS Bank has dedicated 10 percent of its pre-tax profits to community reinvestment and charitable donations.

One program TS Bank has funded is a K-12 financial literacy program for the Treynor school district. Students learn about investing, credit, loans, entrepreneurship, and more. Elementary students even have an in-school bank to deposit money for savings.

Another project TS Bank is helping sponsor is the new Treynor Family Recreational Complex, which will feature baseball and softball diamonds, soccer fields, and a pool.

“There are a lot of businesses out there that extract from the community,” Josh said. “I would hope that people look at our bank and just know that we’re going to support the community.”

The Guttaus are involved outside the bank, too. Mick and Judy both participate in their church, local groups, and community boards. Mick has served on the ISU Alumni Association Board of Directors and as the superintendent of banking for the state of Iowa, and he is currently on the ISU Athletics Council. He still enjoys flying, and he has five tractors on his 80-acre farm, which is located within a few miles of their children and grandchildren.

Mick has no plans to retire any time soon. As long as he’s able, he wants to continue to be involved and work to develop the bank and community.

“This is our hobby,” Josh said.

The past 35 years – buying the bank at age 31, surviving the farm crisis, and then thriving through the financial crisis – has been
“a great education,” Mick says.

“It’s just been a continuous challenge.”

Article by Kayla Schantz Choate, a 2012 ISU graduate with a degree in journalism and mass communication, international studies, and Spanish. Choate lives in Des Moines and works as a freelance journalist.

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