Medica 2020 Annual Report


The power of local banking

Our customers and members count on our financial strength to cover the cost of their health benefits. To meet this obligation, we hold reserves in credible financial institutions. Our longstanding practice had been to place our reserves almost exclusively with large national banks. But a 2019 conversation between our CEO and the president of an Edina, Minn., community bank changed our thinking and led us to put some of our reserves to work at the local level in 2020. With no inkling of the economic crisis to come, we teamed with Independent Community Bankers of Minnesota (ICBM) in January to deposit $20 million of reserves in local banks across the state. ICBM member banks completed a short application to tell us how they would use the deposits, and we purchased $250,000 certificates of deposit from all 80 that applied.

Many banks that participated in the initial round of funding are located in rural communities that depend on the struggling agriculture sector. These same towns have declining populations and older homes in need of repair. One bank saw a need to support shops that would suffer while road construction routed traffic away from the town’s business district. We expanded our community banking commitment twice during 2020 in response to the pandemic and social unrest. In May, we made $15 million in deposits available to local banks in Nebraska. In July, we deposited $1 million in four neighborhood banks in Minneapolis and St. Paul to help local and minority-owned businesses rebuild and recover.

“In small rural communities such as ours, the credit needs of our clientele often exceed our ability to raise deposits locally, so your deposit will allow us to continue making loans to small businesses and farms.”

Darin Latterell Vice President, Kelliher Branch First State Bank of Bigfork Bigfork, Minn.

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