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Why you should be banking with First Farmers & Merchants National Bank

A small bank supporting the economies of both a small town and a big city in Minnesota

You might think Minnesota would struggle as the incredibly cold, second-most northern state, especially when the western prairies are used predominately for agriculture which could be drastically affected by their harsh winters. However, the diversification of industry over the past several decades has left the economy in a great position, and the state is one of the wealthiest and the best-educated in the nation. While we often emphasize investing in banks in states which are in desperate need of effective lending, the Better Banking Options in Minnesota are still an important piece in what keeps the people of this area thriving.

Like Drake Bank that we covered last Friday, First Farmers & Merchants Bank is a small banking institution working to make a significant impact on the economy of the Twin Cities. Though they do have one branch in St. Paul, much of their focus is on their hometown of Fairmont, Minnesota, a small town about two hours southwest of Minneapolis. This town of about 10,000 relies on employment from a small medical center and a few manufacturing plants, but like most rural economies, also relies heavily on agriculture.

In order to properly support this economy, First Farmers & Merchants National Bank, living up to their name, does an enormous amount of small farm lending, nearly six times as much as our benchmark of 2% of lending. This is a particularly important area of lending in the modern world, as much of rural America still relies on small-scale agriculture, and this kind of farming is much better for conservation than the monoculture typical of industrial farms. Their other lending priority is to “merchants,” or small business, where they devote 30% of their assets, and which contributes greatly to both Fairmont and the St. Paul area.

However, while they do a fair amount of housing lending at 31% of their portfolio, only 20% of it goes to low- and moderate-income households. We would encourage them to increase this number, because the median income of Fairmont is significantly below the national average, even while Minneapolis/St. Paul residents have incomes slightly above the national average. This is also somewhat surprising considering that both of their two branches are in low- and moderate-income neighborhoods.

Despite this one slightly disappointing statistic, First Farmers & Merchants National Bank is a great option for anyone looking to invest in both the small business economy of St. Paul and the small farms of Fairmont. With a satisfactory CRA rating and a positive return on assets, as well as a net-loans-to-deposits ratio of 105.86%, you can be sure that this is both a safe and effective Better Banking Option. They offer online and mobile banking, including bill pay and mobile deposits, so it’s possible to invest in this bank even if you don’t live in the area. Check out their website to get started.

This is another bank we found when doing research for one of our readers on the Minneapolis/St. Paul area. Take advantage of our offer for free, personalized banking research today by leaving a message on our site or by contacting us at

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