As part of BankCherokee’s 100th anniversary celebration, Heidi Gesell and her brother Andy Gesell delivered a cake to Dan Burns, owner of Lloyd’s Automotive in St. Paul and a BankCherokee customer. Heidi is president and CEO; Andy is vice president of commercial lending.

Glen Stubbe, Star Tribune

For Bank Cherokee, a healthy slice of local banking

  • Article by: TODD NELSON
  • Special to the Star Tribune
  • October 26, 2008 - 10:32 PM

In a year that has brought bank failures, a global credit crisis and other grim financial news, BankCherokee CEO Heidi Gesell is bringing customers something sweet: birthday cake.

Founded in 1908, BankCherokee is the metro area's oldest family-owned bank and has weathered challenging times going back to the Great Depression.

To celebrate the bank's centennial, Gesell is taking to the streets to deliver birthday cakes -- and some reassurance -- to key business customers.

"We have been hearing concerns in general, questions from our customers," Gesell said. "One of the things we've been able to do is take the time to try to explain to them, based on what we know, what's going on. It's unfortunate. The news will talk about the bailout and bailing out banks. But a lot of the banks they're talking about are investment banks, which are quite different from Main Street community banking."

BankCherokee is weathering more challenging times this year. In the first half of the year, the bank reported a net loss of $751,000, compared with a profit of $255,000 a year ago, according to figures filed with the Federal Deposit Insurance Corp. Loan charge-offs -- the amount of loans the bank has written off as uncollectible -- rose to $2.8 million from $522,000 last year.

Some of those bad loans went to home builders who were snapping up blocks of lots for future construction, Gesell said, but now cannot service the debt on land or sell model homes they built.

"We're just finding ourselves working with those borrowers, trying to help them through this in whatever way we can," Gesell said. "Some of them are saying, 'I just can't do this,' so we end up going through some sort of a foreclosure process."

Gesell, the third generation of her family to lead the bank, has been president since 1996 and added the CEO title in 1999.

Her father, James Gesell, and grandfather, Russell Gesell, preceded her as CEO. Her brother, Andrew Gesell, is vice president and commercial loan officer. Two other brothers and her mother are not involved in the bank's operations.

First named Merriam Park Bank, the organization moved to St. Paul's West Side and changed its name to Cherokee State Bank in 1920, four years before her grandfather joined it. The bank adopted its current name in 2004.

This year's birthday cake deliveries, Gesell said, exemplify BankCherokee's commitment to community banking and to developing personal relationships with business and individual customers.

She attributes the bank's longevity largely to its community and customer focus, and to its staff, now numbering 85.

The bank has grown as well, with assets rising to $255 million this year from $157 million in 1997. The bank has six branches, though it expects to close its small El Burrito Mercado location and serve those customers from its recently remodeled Smith Avenue headquarters.

The bank's growth has come in part from a strategy that involves targeting niche markets, including the rapidly multiplying number of Hispanic- and woman-owned companies and other small businesses in neighborhoods the bank serves.

BankCherokee also has avoided problems over the years by avoiding what Gesell termed banking fads, like subprime lending.

The bank has turned away from construction lending, a strong niche for the last 15 or 20 years until the housing market soured, Gesell said. As a result, BankCherokee is taking a more measured approach to growth this year.

"Our focus has long been on relationship banking and less on transactions, other than some of the construction lending we've done," Gesell said.

Instead of offering higher interest rates to attract new depositors, the bank is concentrating on serving existing customers, Gesell said.

Current customers range from start-ups such as Phresh Spa Salon to mature companies such as the Wedding Shoppe and Lloyd's Automotive, all on St. Paul's Grand Avenue and all recent recipients of BankCherokee birthday cakes.

"Their staff is consistent," said Lloyd's owner Dan Burns, in business since 1990. "You go to some bigger banks and every week, their people are changed over and you don't know anybody."

Jim Fritz, who with wife Lois has owned the Wedding Shoppe for 31 years, said he had real estate loans with Washington Mutual, the savings and loan seized by federal regulators in September.

"I can't imagine a small- to medium-sized company like ours needing the services of a big bank, unless you've got a lot of borrowing needs," he said. "Any time I need something resolved, BankCherokee gets it done. I can drive by on Smith Avenue or Grand and the lights are on and the shades aren't pulled, and that's a good thing."

The expert says: Ameeta Jaiswale-Dale, assistant professor of finance at the University of St. Thomas Opus College of Business, said BankCherokee's avoidance of subprime lending and stepping back from construction lending were sound moves.

"They've chosen to very carefully select their clients such that any business they do with their clients they can keep on their books and do business with them over the long haul," Jaiswale-Dale said. "Their business model has sheltered them from the present crisis because they chose not to get into too much subprime lending to begin with."

The bank's stability also may make it attractive to some medium-sized, family-owned and even larger businesses, Jaiswale-Dale said.

"They have the bread and butter in place," she said. "As they pursue growth and look for the jam and marmalade, they can look now [at larger companies or those doing business internationally] as other medium- and large-sized banks are getting more shaky."

Todd Nelson is a freelance writer in Woodbury. His e-mail address is

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