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Union Bank & Trust is celebrating the union-owned community bank’s 40th anniversary.
The bank’s union ownership makes it unique. Union Bank & Trust is the only union-owned bank in Minnesota and one of fewer than 10 union-owned banks in the nation.
About 30 different local unions —primarily building trades unions — have an ownership stake in the bank and comprise about 90 percent of its shareholders.
Forty years since the bank’s founding, “that really hasn’t changed. That’s the unique part of what makes this bank so strong,” said Jeff Schrempp, president of the bank since 2011.
“Most community banks are family-owned or closely-held,” he noted. “At some point, they come to the end of the line.”
“When we think ahead, we really are thinking long-term, compared to other community banks,” Schrempp said.
“The fact that almost every union that got in 40 years ago is still an owner is a testament to their commitment and their belief in our mission,” Schrempp said.
He added, too: “It’s been very good for them financially as far as their return on investment.”
The bank pays dividends to shareholders, Schrempp noted, and “the accumulated dividends to our shareholders over the last 40 years have exceeded $10 million.”
“We’re just proud of the fact that we’ve not only survived but we’ve also thrived,” Schrempp said.
Realizing a dream
Union Bank & Trust grew from the idea that the union members who built the city needed “to control what was going on in the financial life of the city,” said Danny Gustafson, credited as the driving force behind creating the bank.
Gustafson came out of the Plasterers union and worked years in the trade.
He was business manager of the Minneapolis Building and Construction Trades Council in the early 1970s when he and local unions decided to pursue the long-held dream of founding a union-owned bank. (He later went on to serve as president of the Minnesota AFL-CIO).
Union Bank & Trust and the United Labor Centre where the bank is the main tenant opened in 1976 at 312 Central Ave.
“One of the highlights that people don’t think about is that Union Bank probably leases over one-third of the space in the Labor Centre,” Gustafson said. “That in effect means Union Bank has paid one-third of the mortgage.”
As Gustafson noted in a recent interview at the United Labor Centre, “the trades office here, bank here, have trust funds here.”
In the early years, Gustafson said, the bank grew by financing millions and millions of dollars in construction projects — which had the double impact of helping to create construction jobs for union members.
“Our members are helping our members,” Gustafson said. “That’s what the labor movement is all about.”
From $1 million to $121 million
To launch the bank, Gustafson and Jack McKenzie, then business representative for the Bricklayers, went to union meetings for 2-1/2 years to seek support for the idea.
“Union after union said yes,” Gustafson said. “We raised a million dollars that way.”
“Intermixed with that, we were also raising funds to build a new building,” Gustafson said.
“You had somebody who had an idea — Danny Gustafson — and he followed through with it,” said Ray Waldron, the bank’s current board chair and former president of the Minnesota AFL-CIO. “He had the credibility to ask for money and share this dream.”
“In those days, 40 years ago, that [$1 million] was a lot of money to come up with from a general fund,” Waldron noted.
From that initial $1 million dollars, the bank by its 15th anniversary in 1991 had grown to $25 million in assets.
At the time of the bank’s 30th anniversary in 2006, the bank reported $73 million in assets.
By the end of 2015, bank president Schrempp said, Union Bank assets had reached $121 million.
The Bank’s trust department, he reported, also had reached a new peak, with $7 billion managed in its custody.
“Commercial banking and the trust department are the two areas that fuel our income,” Schrempp said.
Union mergers have turned some of the bank’s original owners — local unions — into unions which now have multi-state jurisdictions. “As a result, we have benefited from that,” Schrempp said.
“We’ve helped finance some out-of-state training facilities which have been real nice opportunities for us,” Schrempp said.
The Union Bank & Trust difference
Over the years, Waldron said, the bank has benefited from directors who looked at the big picture and didn’t succumb to tunnel vision, “which keeps it growing, too.”
Directors have come and gone, drawn from the leadership of Union Bank & Trust’s largest shareholders.
Gustafson, who will be 88 in June, is the sole remaining member of the bank’s original board of directors.. He served 38 years as board chair, stepping down from that position two years ago.
He remains passionate about the accomplishments of the bank, why it’s unique, and what the future holds.
Union Bank & Trust is not only-union owned but also is a union workplace.
“Our costs are quite minimal compared to average banks,” Gustafson said. “We put it all into staff here, not to bonuses to people who already have a lot of money.”
Union Bank & Trust currently has about 30 employees, one-half working in the bank and one-half working in the trust department. Most staff are members of Office and Professional Employees Local 12, which has represented the bank’s workers since its founding.
“In 40 years in business, we’ve never had a labor dispute with our employees,” Gustafson said proudly.
“With the benefits and salaries, it’s been a good place for everyone to stay,” Schrempp said. “We have a lot of longtime employees. We pride ourselves on that.”
One of the many long-time employees is Local 12 union steward Linda Pietrzak, the bank’s bookkeeper.
“I started two years after the bank opened,” she said. “I’m proud to have been here 38 years.”
“This is a small bank, so I get to learn way more things,” she said. “I love working here… It’s been a very good experience and I don’t regret one day.”
In a world of giant banks with offices nationwide, Union Bank & Trust offers something the big banks can’t.
“Smaller just gives a better feel, it’s a better touch, it’s a better experience,” Schrempp said. Some people may like a bigger institution, he noted, but “some like it to be more personalized.”
“We have a unique niche and the unique niche is who are our owners and who are our clients,” Schrempp said.
Looking back at 40 years of the growth of Union Bank & Trust, “it’s a lot different than when we started,” Gustafson said.
Back at the start, he recalled, “one guy asked me, ‘what does the labor movement know about banking?’”
Gustafson replied: “We’re no different than you. What we don’t know, we hire someone who does. Isn’t that what business does?”
Bank board chair Ray Waldron called current Union Bank & Trust president Jeff Schrempp “the best president I’ve seen in there.”
Waldron credited Schrempp for bringing new business and talented new staff with him when he joined the bank. He said Schrempp as the bank’s president maintains a great reputation and has a great vision for the bank’s future.
As the bank celebrates its 40th anniversary, Schrempp wants to be sure Gustafson continues to get due credit.
“For Dan Gustafson to be the key person, to have that vision to start it, essentially raised all the capital, served the needs of the unions and their members, and served on the board for 40 years, is an incredible feat,” Schrempp said.
“To have a great employees and have a great board makes for a great Union Bank & Trust,” Schrempp added. “They all make me look good.”
“Our goal has been pretty well met,” Gustafson said, although he still would like see more unions besides building trades unions bringing business to the bank.
“There’s a great opportunity to continue to grow,” Waldron said.
“We think a smaller player in this market still has a real opportunity,” Schrempp said.