Spotlight On: Chuck Mausbach, CEO, Frandsen Financial Corporation
November 2024 — In an interview with Invest:, Charles Mausbach, CEO of Frandsen Financial Corporation, talked about the company’s strong organic growth, maintaining credit quality, and having received multiple awards, including the SBA Lender of the Year, the Star Tribune Top 200 Workplace, and the Forbes Best in State award. Mausbach highlights the company’s strategic focus on relationship banking, customer convenience, technology investments, and historical acquisitions of smaller banks, while outlining goals for continued growth in SBA lending, customer financial planning services, home loans, and commercial and agricultural lending over the next few years.
What have been some of the main highlights and key milestones for Frandsen Financial Corporation in the last 12 months?
We’ve had nice organic growth, and our average earning assets are up about 8.5%. Our credit quality remains strong with few delinquencies, which we are pleased with. We have also received a number of honors, such as the Star Tribune Top 200 Workplace Award for the 7th year in a row, which is based entirely on employee feedback. Additionally, we were proud to receive the SBA Lender of the Year award for the second consecutive year for banks over $1 billion in our district. Another highlight is receiving the “Best in State” award from Forbes, based on customer feedback. Lastly, we are proud of our scholarships through the Frandsen Foundation, where we offer all the graduates of 10 high schools full tuition and money for books to attend a vocational school. This is part of our effort to promote post-secondary education as a viable option for everyone, regardless of their financial position.
What is your overview of the banking and financial services industry in Minneapolis-Saint Paul at the moment?
Our corporate office is in the Twin Cities, but the majority of our banking offices are located outstate in Greater Minnesota. We also have three offices in Wisconsin and one in North Dakota, so our footprint is quite broad. Overall, banking has gone through some interesting times since the Federal Reserve raised interest rates by 550 basis points over 18 months in 2022 and early 2023. Because of that, in March of 2023, there were three large bank failures, which caused ripples nationwide. Most banks scaled back or became more selective with their lending due to liquidity issues. Fortunately, Frandsen didn’t need to make significant changes to our lending posture. Today, almost every bank is actively chasing deposits. As rates went up, deposits became moremobile and more valuable so banks had to work harder to maintain and grow them. Having said all of this, I’d say the banking environment is still very healthy in our area.
Which of your products and services are serving as the main drivers of growth?
One of the main drivers is Small Business Administration (SBA) lending. SBA lending has allowed us to deepen our credit approvals to support businesses in the area, which has led to excellent loan growth for us. Another key area we’ve focused on for the last decade is financial planning through our Wealth Management and Trust department, as well as Frandsen Investment Services. We help people with retirement planning as well as offer other investment products and advice. We take a planning approach to assist people early in their careers, so when they reach retirement, they’re well-positioned. We’ve grown to about $2 billion in assets under management in these areas. Technology is also very important, and we’ve focused on providing tools that help us stay competitive against our larger bank competitors. Lastly, we’re active in residential real estate lending. We currently have over $1 billion in home loans that we have sold into the secondary market that we service. Additionally, we carry about $700 million in home loans on our bank books. Residential real estate lending has been a great source of customer acquisition and growth for us.
How are you leveraging technology and innovation in order to improve customer experience?
We aim to be strategic with our technology spending because there are endless places to put your dollars. It can be easy to overspend. Most of our innovation is focused on making it easier for customers to do business with us. We’ve recently spent considerable money upgrading our website and rolling out a new platform for retail online banking, which will provide more self-service features. Next spring we’ll be upgrading our business online banking as well. We have found that the younger generations prefer to do business through technology rather than coming into physical branches. We’re investing in technology that allows them to do that.
Has there been a shift in client and customer expectations in recent years?
The primary shift we’ve seen is that the current generation values convenience over coming into brick-and-mortar branches. We’re seeing a decrease in the in-bank transactions while electronic transactions are rising rapidly. If you don’t offer tools that customers can use at their convenience, they will understandably be frustrated. This shift was accelerated by the pandemic, as more people adapted to digital banking.
What are some of the primary challenges for the banking and financial services industry at the moment?
The top challenge banks are facing today is fraud, as criminals become more sophisticated with their tactics. A decade ago, we didn’t even have a fraud department, but now we have dozens of people dedicated to it, and we’ve invested heavily in technology to address the issue. Secondly, our entire industry has grappled with challenges with net interest margins and liquidity caused by the Fed rapidly increasing interest rates. Lastly, the regulatory environment has become increasingly complicated and expensive to navigate. Regulators continue to add more and more requirements, some of which conflict with one another. Governmental tracking, compliance, and documentation has become more complex, requiring additional technology and staffing to manage it.
Are you looking to expand into new areas of business and open more branches, or consolidating the growth that has already been achieved?
Our growth has primarily come from acquiring smaller banks in our geographical footprint. We have become well-known for being an acquiror when banks are ready to sell. We haven’t been very active in opening brand-new branches from scratch, though we’ve successfully done it a few times. We’re now at a size where we’re experiencing nice organic growth as well. We anticipate continuing all of these strategies as opportunities avail themselves.
What are Frandsen Financial Corporation’s top goals and priorities for the next two to three years?
We will continue to prioritize the things that have made us successful historically, which is focusing on the customer, their needs, and their convenience. We spend a lot of time talking to our customers to understand their needs and provide advisory banking, and that will remain our primary focus. We’ll continue to expand our SBA lending, as it’s beneficial for the markets we serve. We’ll also continue focusing on financial planning with our customers. Residential real estate is an area where we’ve always done well, and homeownership is important to us, so we will continue to prioritize that, along with commercial and agricultural lending.
For more information, please visit:
https://frandsencorporation.com/companies/frandsen-financial-corporation/
