Chris Grimm: Taking the Renaissance Path to the Corner Office

by Liz Wheeler

Once upon a time, there was a farm boy in southeastern Iowa who learned about raising livestock and growing grain. He had twin older brothers who were mechanically inclined and could build farm machinery and repair practically anything. This farm boy never quite imagined how far from the farm these two things would take him.

In the early 1980s, Chris Grimm was married and had his own real estate brokerage in Wapello, Iowa. His older brothers, Kent and Curt, were taking care of the family farm. While the twins had only completed a high school education, "those guys were just geniuses when it came to things of a mechanical nature," Chris said.

Chris' dad Mark, who had already retired from farming, became acquainted with a gentleman whose company made coin-operated pulse machines. Mark talked him into letting his sons fabricate a new cabinet for his machines.

The twins had a farm shop with about 2,000 square feet, and this is where they began building the particle-board cabinets. But business grew quickly and soon the brothers were looking at using plastic to create them. The three brothers went to a show and saw thermalforming. They then went out and bought a used machine in Omaha that had been sitting in a storage building. The twins retrofitted it and launched Grimm Brothers Plastics.

"I sold my business, real estate and insurance brokerage," Chris said, "and I set up the books and incorporated [the company.] Our very first customer was this guy with these coin boxes." Chris then began calling on other potential clients like J.I. Case. "They took a chance on us, and we ended up doing what was called a cup and pencil holder for their 580K backhoe."

"We launched from these nothing jobs and leaped into doing something for a Fortune 400 company. From there, we started cold calling on companies that were near southeast Iowa," Chris said. The companies tended to be ag related at first, but "we quickly saw that they didn't have very deep pockets, so we transferred and started calling on medical companies." In just 10 years, the brothers expanded to over 100 employees and more than $10 million in sales annually.

"We did trade shows all over the country, did business with Fortune 500 companies," Chris said. "It changed the complexity from all of us being small town farm kids to being in a little bit bigger leagues."

At first, the three brothers got along very well in business. "We complemented each other," Chris said. "My brothers were just incredible from a mechanical and engineering standpoint. I provided sales and administration." However, friction seeped in, and a consultant in the 1990s told them that if they were going to stay brothers, then they needed to part ways.

Chris' brothers bought him out. "My whole life came down to that point," he said. He was leaving Grimm Brothers, and his wife of 15 years left him. Chris was planning on leaving town and getting a master's

degree, but one of Chris' acquaintances told him to stay put and take care of his 10-year-old son or Chris would regret it. Chris listened and instead accepted a position as a Small Business Development Corporation director. Over the course of the next two years, Chris met with over 400 clients: small restaurants, dress shops, manufacturing. Chris saw the nitty-gritty of each business from its balance sheets, income statements, and even menus.

One morning, Dick Buenneke, owner of Iowa State Bank in Wapello, called Chris asking if he would be interested in becoming the bank's chief executive officer when the current one retired. "I literally thought he had the wrong number," Chris said. "I had borrowed money from a bank, but that's about what I knew about banking. He basically said 'a bank is a business, and I heard that you know how to run a business, and we'll teach you the banking part.'"

Everything Chris had done to this point had prepared him well for that role. "I was able to parlay my whole repertoire—raising livestock and grain, real estate business, keeping books, doing mortgages, manufacturing, rapid growth, now doing consulting for small restaurants or dress shops" into this new banking role. "I had lived the life of almost every customer. It did create a different sort of banker. I empathize with almost everyone we do business with."

Once Chris and Buenneke came to terms, Buenneke immediately enrolled Chris in the Wisconsin School of Banking in Madison. Chris began his job in May and started school in August. In class, Chris figured the guy sitting next to him got sick of him asking questions like what's a NIM? What's a CSR? ALCO?

When Chris began, the bank had $20 million in assets and two locations in a county that didn't have more than 20,000 people. But from 2001 until 2008, "life was good," Chris said. The bank had rapid expansion, good profits and no losses. The bank tripled in size. Then, the recession hit.

Like a lot of banks, Iowa State had done a lot of participation loans outside of the area and needed to work through those. "It took us about two to three years to turn ourselves around," and by 2012 or 2013, the bank was doing okay.

When Chris had joined the bank, he had them look into selling mortgages to the secondary mortgage market. Banks in the area had only offered adjustable-rate mortgages with one- to three-year balloons, a fact that frustrated him as a real estate broker. That secondary market income helped get the bank through the recession with $80 million in assets.

But, in 2014 on a Friday afternoon, another blow landed. As Chris was just getting off of a flight, he turned his cell phone on. Immediately, it started pinging. Seven emails arrived with staff resignations. "A competing bank had been trying to hire, for 12 years, one of my senior lenders," Chris said. But that year, the bank got more aggressive and, in order to get the one, the bank hired seven. The banker "gave everybody more money, more benefits, and promised to build a bank across the street in a town of 700. It was catastrophic. If we had not had two-week notice, I could not have opened Monday," he said. "It literally wiped out the entire back office operations" along with the bank's senior lender and its ag lender.

Chris got to calling just about everyone he could think of including his attorney, the Iowa Department of Banking and core vendors. "We outsourced a tiny fraction of things. We shadowed people leaving for those two weeks. Because they were abandoning ship and were reservedly accommodating, in over two weeks' time, we gained enough information to keep ourselves afloat." Those seven staff, however, took with them nearly a century of Iowa State Bank experience and $20 million in business. "It was kind of bank robbery by another bank."

With all the new stress brought on by the employee migrations, the bank experienced some additional turnover in early 2015. The bank then moved its operations to Burlington, Iowa and hired a data specialist to rebuild operations "that are stronger and better than ever. We found things that were not being done correctly. [We] probably need another six months of maturation, but we are getting operations to be rock solid again," Chris said.

Lending is back on track, and Chris expects the bank will have made up the $20 million in its portfolio and then some by the end of this year.

In addition, the bank also opened another location in West Des Moines. "We're very, very excited about the future especially with what's going on here in Des Moines, it's just crazy—there's a lot of competition here but a lot of businesses here as well," Chris said.

However, due to another bank with the same name in that town, the Wapello-based bank ended up officially changing its name. "We did our application under Iowa State Bank but got sued right away," Chris said. The Wapello bank then told regulators they would just go by BANK. Regulators quipped that perhaps every other bank might then sue them for name infringement. However, the only requirement for naming a state bank is that it have the word 'bank' in it, so Iowa State Bank changed its entire charter name to just BANK, so the Wapello office is known as Iowa State Bank and Office of BANK.

"We eventually will go across the board with BANK," Chris said, and he thinks it will go over well, "as long as we brand ourselves properly and keep it from becoming corny."

Iowa State also launched a new business acting as a community bank mortgage aggregator. With seven community banks already on board, Chris expects to sign another seven by year-end. And the bank recently exhibited at the Independent Community Bankers of America convention where an additional two dozen banks showed interest in the product.

The turmoil of the last two years "have been the most difficult part of my 35-year working career, but has been the most educational and rewarding," Chris said. The "bank is stronger and cleaner than ever. Earnings are weak because of the lost portfolio but are starting to come back as well...we are recovering, quite nicely."

"With adversity comes great growth and great opportunity if you don't quit."

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