2023 Community Bank Case Study Competition Journal

SECOND PLACE: Iowa State University

It appears the credit risk of the bank is properly managed. Halterman started his career with Farm Credit at a time in which he had a front row seat to the Farm Crisis in the 80s and its related lending errors. Those early scars have appeared to serve him well, instilling the discipline of proceeding with caution

Deposit growth for PSB exceeds its competitors, as illustrated in Figure 1. The deposit growth in communities with no competition is faster than in branches with existing competitors. This demonstrates a strategy of targeting communities where the bank has a local monopoly.

and passing on credit opportunities that lack merit. Average net loan losses over the past five years of $308 thousand over an average portfolio of $193 million calculates to an acceptable 0.16%. Delinquent balances were elevated in 2019 but essentially non existent since that time. Halterman explained that credit issues reported during that period were isolated to a single borrower. Asset Growth Asset growth would not occur without the growth in deposits necessary to fund them. Halterman is proud the bank has not struggled with deposit growth since its inception. Table 5 illustrates the deposit distribution between the bank’s seven branches.

Table 4

2019

2021

2022 Average

2018

2020

28% 16% 6% 4% 20% 15%

Loan Growth

Custom Peer

5% 4% 8% 11% 14% 8%

Iowa Banks

4% 3% 2% 2% 11% 4%

Average Loans (millions)

$147

$181

$202

$206

$227

$193

Net Loan Losses (thousands)

$101

$881

$513

($3)

$50

$308

Loan assets in 2017 used to compute a 98% 5-year rate of growth were $130,163K source: UBPR

Table 5: Deposit Distribution

2019

2021

(2021 population)

2018

2020

2022

68% 63% 62% 61% 57%

Indianola (15,747)

9% 11% 12% 14% 15%

Carlisle (4,201)

Knoxville (7,472)

0% 0% 0% 0% 2%

Pleasantville (1,676)

16% 15% 14% 13% 13%

Milo (772)

3% 3% 3% 2% 2%

Seymore (637)

0% 3% 4% 5% 6%

Lacona (342)

4% 4% 5% 4% 5%

TOTAL DEPOSITS $235,434 $253,477 $305,101 $377,173 $416,686

source: FDIC Deposit Market Summary June 30 data

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