FAIRFIELD – Iowa State Bank in Fairfield is celebrating its 90th anniversary since its official incorporation as the Iowa State Bank and Trust Company.

According to a history of the bank from Vice President of Human Resources and Marketing Alissa Ward, the bank was born from the merger of two banks, Iowa State Savings Bank and Iowa Loan and Trust Company. In the aftermath of the stock market’s crash in 1929, bank failures were rampant, and those two banks were marginally profitable and solvent but still struggling to compete during the Great Depression.

In the 90 years hence, Iowa State Bank has continued to grow, and that growth has accelerated in the past decade. The bank moved from its former location on North Court Street into a new building at 55 S. 4th Street. In the last couple of years, the bank has opened a new branch in neighboring Ottumwa. There, the bank moved into its location on Pennsylvania Avenue in November 2022, and President Aaron Kness said plans are underway to construct a new building for the bank in Ottumwa with a drive-up ATM. The company is hoping to expand into other towns, too.

“We see ourselves in county-seat towns,” Kness said. “We don’t want to be hundreds of miles from our headquarters here in Fairfield. We think we serve that small business, consumer niche really well, and we’re looking to stay in those types of markets.”

The bank has expanded to 30 employees, and its assets have tripled under Kness’s leadership over the past 11 years.

Ward commented, “That’s a pretty impressive feat, in my opinion.”

Kness said it’s sad to see small businesses move away or have to shut their doors in rural communities. Fortunately, Iowa State Bank is a homegrown success story that is investing in its communities, giving consumers what they want and adding jobs to the local economy.

“When you think about a bank, ours depends on the success of the people in the communities we serve,” Kness said. “We see opportunity and potential in these communities, Fairfield and Ottumwa.”

Iowa State Bank has been involved in many of Fairfield’s largest projects such as the Fairfield Municipal Airport, the Fairfield Arts & Convention Center, the Cambridge Sports Plex, and the Cambridge Little Achievers Center, among others. The bank stated in a news release that, “This commitment to the communities we serve is also evident in the many other projects and organizations we support from fine arts, housing, education, childcare and economic development.”

Though Iowa State Bank is focused on assisting its clients locally, it does have to keep one eye on trends in the wider banking sector since these will determine interest rates. Kness said the current interest rate is not that different from the 1990s when he took out a loan with a 7 percent interest rate. Rates have fluctuated since then, dropping to the “high 2s” in 2020 and then rising again over the last three years.

“In March 2020, the Federal Reserve lowered rates by a lot, and that created a situation where a lot of homeowners who had home loans started refinancing. There was a refinancing boom,” Kness said. “Rates stayed low because there was no alternative investment, and it did stimulate the economy. A lot of banks, when loan volumes were down, decided to invest money in treasuries and bonds. And when interest rates shot back up, those investments were under water. We don’t have that large of an investment portfolio. Our primary investment is in our loan portfolio and in our customers.”

Iowa State Bank offers a variety of loans to people who need help purchasing automobiles, homes and other property. Kness said that agricultural purchases, whether for land, equipment or materials, constitute over half the bank’s business. Kness said he enjoys speaking with young people who are buying their first automobile so they can talk about how to build a good credit score.

Ward said what separates Iowa State Bank from other banks is that money deposited in the bank is kept in the local economy through loans to members of the community.

“If it’s a larger bank, a large conglomerate, that money doesn’t necessarily stay in the community,” Ward said.

“Our investments are going to be right here in the communities we serve,” Kness said.