The Town the Economic Downturn Forgot
Colesburg, Iowa – During the same week in September when the government took over Fannie Mae and Freddie Mac, the Farmers Savings Bank in eastern Iowa opened its fifth branch. The number of foreclosures the bank’s had? Zero. Tightening its credit? Not at all.
“At the local banks, you don’t see those problems. We’re fine,” said Mark E. White, the bank’s president and CEO.
The area around Colesburg, Iowa, seems impervious to the nationwide economic downturn. The farms are doing well. Farm equipment dealers can’t keep tractors in stock. Property prices are good. As banks elsewhere in the country restrict lending or recall equity lines of credit, the Farmers Savings Bank is continuing lending as if nothing is happening.
“The types of customers that have gotten loans through our institution in the past will continue to get loans through us,” said Michael J. Funke, the senior vice president, a loan officer and part-time farmer.
The bank was founded in 1907 and was one of the few in this area that made it through the Great Depression. It prides itself on being conservative in lending and knowing exactly how the loan is going to be used. Recently, as other banks allowed financing for homes up to 90 or even 100 percent of the home’s value, the Farmers Savings Bank kept the traditional 80/20 rule, which means buyers had to have 20 percent of the down payment in cash. They kept all their mortgages in-house.
During the real estate boom, they lost business to out-of-town banks, which offered better deals. Now some of those banks have folded and the customers are returning.
“We’ve been a little more conservative, which has really paid off,” said Funke.
On a rainy Thursday afternoon, Joel Lindaman, a local farmer and businessman came into the bank. Lindaman said he already has more than half dozen loans from the bank and was looking for more. He needed some money to buy farm equipment and some land on which he was hoping of building a campground for tourists. Lastly, he wanted money for a church that he wanted to fix up and lease out to a Hispanic congregation.
“I’ll work through those numbers, but I don’t expect there’d be a whole lot of problems,” Funke said about the first proposal.
But Lindaman wasn’t expecting any difficulties.
“I’ve been able to get loans for everything,” he said. “I’ve had a really good month.”
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