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Show Basin State Bank shows impressive growth record by Steve Christensen Assistant Editor With several countries on the verge of bankruptcy, the world banking market could be in trouble. There has even been talk among analysts of a world banking collapse. However, that trend does not seem to be prevalent in Utah. Monday, First Security Bank in Salt Lake City, held an open house to announce an-nounce last year was their most profitable pro-fitable ever. Likewise, Interstate Bank and Zions Bank have also just completed com-pleted their best years ever. On the local front, an independent bank, Basin State, is perhaps even more a success story than the larger banking corporations. Basin State Bank celebrated its second . . year anniversary .earlier this month-. President Jim Drollinger said they are the fastest growing state controlled bank in terms of both size and profit ever in the state of Utah. After starting in 1981 with $1 million, they now have a capital structure of $1,827,000. This kind of growth is unheard of in the banking industry, according to Drollinger. He said it is typical for a bank to go two to five years before showing any profit. Basin State was profitable after only the first two or three months. Drollinger said people just aren't aware of the success of Basin State Bank. They now have over $17 million in total assets. This is actually larger than the Bank of Vernal when it was purchased purchas-ed by Zions Bank in 1973. Basin State Bank is made up almost exclusively of local investors. Of the 100 total investors, 97 are local. Almost all money taken in from depositors remains in the community. The only money which leaves the area is the reserve requirement require-ment of the federal government, which is deposited in federal funds. Drollinger said Basin State is the only bank in the area that keeps its investments in the community. Besides this, Drollinger says they make a concerted effort to purchase pur-chase everything they need locally, keeping keep-ing the money in the area. Banks are businesses just like most other businesses. The commodity banks work with its money. They borrow (pay interest to depositors) money at one rate and lend it at a higher rate in order to make a profit. They must have enough margin of gross profit to show a net profit. pro-fit. In order to do this, Drollinger said they watch the marketplace and keep in touch with what other banks are doing. Some of the interest rates are set by law, and there is nothing any bank can do about it. The ones they have control over remain extremely competitive. Drollinger said everything in the banking bank-ing industry is relative. A couple of years ago when interest rates when through the ceiling, they were making no more profit pro-fit than they are now. At times they must pay more for the money they borrow. When this happens, they must lend it out at a higher rate of return in order to make money. When rates to banks go down, naturally so does the rate banks charge. A federal policy which created interest bearing checking accounts and money market deposit accounts has cost banks as much as 27 percent loss of profit. This year Drollinger said Basin State Bank projects their profits at $400,000. That profit would be closer to $700,000, if it were not for the increased operating costs. Even banks are involved in unfortunate unfor-tunate business dealings. Drollinger said Basin State Bank was service agent for four condominium projects in Ashley Valley, the Ashley Park, Willow Brook, Pheasant Glen and Valley Grande. He said it was unfortunate Basin State was not heavily invested in these projects since all but Valley Grande have been foreclosed on. Basin State owned 10 percent per-cent in the Willow Brook and the Pheasant Phea-sant Glen projects, but were able to have their portion bought out by the funder in Willow Brooks. Drollinger said that by being a service agent for these condominiums, con-dominiums, people have thought they were heavily invested, which is not the case. All a service agent does it take the money from the funder and disburse it according to the construction bids which are let. They do this for a fee, and Basin State has no connection with the con-dominums con-dominums beyond this, except for the 10 percent interest in Pheasant Glen and Willow Brook. Basin State has about 22 or 23 employees and a monthly payroll of around $32,000. A unique thing Basin State has done the past two summers is hold a barbecue dinner for all its customers. Last year they supplied two beef, two pork, and two lambs, plus all the trimmings for the meal. Drollinger said it is just their way of showing the community they appreciate ap-preciate the support and a way to give the customers something back. |