Fairmont native enjoys great success in a number of arenas.
Photo by Jeff Silker
Fred C. Krahmer wins the award for “most diverse background,” which he has earned in life by experiencing a hodge-podge and mishmash of this and that, an imbroglio that became the solid foundation for an equally diverse business career.
His well-rounded resume includes teenage summers working at an amusement park and befriending a band of Gypsies, feeling the sting of military discipline at Faribault’s Shattuck School, socializing there alongside students from all over America, and learning how to “think” from his University of Minnesota Law School professors. In addition, don’t forget the political smarts he has acquired working alongside son and business partner Fred W. Krahmer, a.k.a. Martin County DFL chair.
Often drawing on all this experience, Krahmer (say Kray-mer) now has unrelated careers as a major grain and pork producer in Martin and Faribault counties, a land developer, a lawyer with Krahmer & Bishop, and as a banker with $193 million Profinium Financial of Truman, the fifth largest bank headquartered in Connect Business Magazine’s coverage area. Until recently he also was a golf course owner.
Finally, he is no Milton Waddams, the stapler guy in the movie Office Space—meaning he isn’t timid. Rather, Krahmer has this unflappable confidence that seems to come at least in part from being a modern-day Renaissance man, a person of numerous interests and talents.
Can you give an overview of your business interests?
I’m an attorney with the law firm of Krahmer & Bishop and my legal practice focuses on estate planning, taxes, real estate and corporate matters. All my work is in areas that television producers don’t make serious shows about.I’ve also been involved most of my life in grain farming and more recently swine production. I’m involved with Profinium Financial, a new name for the now combined People’s State Bank of Truman and Martin County National Bank of Fairmont. And I’ve been involved in developing property in Fairmont.
Take me through your life.
I was born in Fairmont and live here, spending most of my early life at Interlaken Park south of Fairmont, which, when I was growing up, still had the remnants of an amusement park. It had a dance hall, roller-skating rink, bathhouse, the merry-go-round and a restaurant, Merrigarden. My father was involved with the park. I began working there when I was 10, helping with the roller rink and taking tickets for the merry-go-round. On one July 4 I put the beer on ice for the expected crowds.
When you live in a town like Fairmont, exposure to different minority groups is rare. A band of Gypsies in the early ‘50s would come through each summer and I’d bum around with them. For me it was enlightening. For the most part, Interlaken Park, which began in the ‘20s, went out of business about 1954.
What did you learn from the Gypsies?
They’d set up little trains to give kids rides. On the long sidewalk from the ballroom to the Merrigarden they set up game stands, such as throwing darts for prizes. You could swing a hammer and ring a bell. Of course, there were secrets to how those games worked.
There were times during dances when patrons having had a few too many to drink would come out to swing the hammer and try to ring the bell. Working alongside the Gypsies, I’d come up with a hammer, they’d flip a switch, and I’d swing and ring the bell. Big guys would look at this little 12-year-old and think they could do it too. I became sort of the shill for them to get more money. It was an eye-opening experience involving a different culture and people.
Another story about the park: my dad used to go down Sunday mornings to the parking lot and pick up bottles left after the dance. I’ll always remember something he said, and I think it’s still so true today about what is causing great changes in our society. He said, referring to the park, “The car is going to kill this operation.” What he meant was that people were becoming more mobile with the automobile, and they could go farther and farther in a day and still get back home before nightfall. So businesses in the little towns were going to die. I think you can see that in general with shopping in smaller towns today. From Fairmont, for instance, you can drive to Mankato or Minneapolis in a day and easily get back. That was an early observation in life and it took me many years to grab hold of its importance.
What of your relationship with your father?
My father was a lawyer and businessperson involved in real estate. He grew up without any parents after they died when he was about 10. His oldest brother Arnold and other family members raised him. He became a successful businessperson; he was a risk taker, failing at some ventures and making others work.
I’m an only child, so our relationship was quite close. He died when he was 54. I had always intended on becoming a lawyer like him and was a senior at the U. of M. when he died. Being able to practice law alongside him was something I was never able to do.
Earlier on, I went to school in Fairmont through eighth grade and on to Shattuck School in Faribault for high school. After that I went to the University of Minnesota, as I said before, and then on to the U. of M. Law School and back here.
I started practicing law here. I also became involved in farming and about 35 years ago in Martin County Bank when asked to be on its board. In 1979 I bought into the Truman bank through Barny Huemoeller, a client and friend. The question came up about him buying out his family members because at his age he needed an exit strategy. So along with his two lawyer sons we put together a deal. I became involved with that bank as a partner before becoming sole owner.
As for Martin County Bank, I had been on its board a number of years and known the Ward Family. Albert Ward began the bank, and his grandson living in San Diego owned it. One day Mrs. Ward called and said, “Would you like to buy it?” I didn’t say anything. The next day I called back and she was laughing. She was 93. She said, “This is the first time I’ve ever known you to be at a loss for words.” That was only four years ago in 2000.
I’ve been told you’re not afraid to offer your opinions about Fairmont. So I’m going to run some questions by you, and want you to comment. First, how could Fairmont better position itself in the region?
Fairmont struggles with change. Of course, any community struggles with it, but Fairmont especially has a problem. Somehow we need to get by that and start to realize that unless we grow and do things differently we will die. Fairmont does some things quite well. We have a good park system and schools. But I struggle with the fact that we can’t seem to bring younger people back to Fairmont.
There is a tendency of certain people here to focus not on what they are going to get from something, but on what the other person is going to gain. What I’m saying is that if you’re going to have two people or more put a deal together it has to be beneficial to all sides. If you’re always focused on what the other person is gaining you are never going to put a deal together. You have to be willing to say that this is good for me and I hope it’s good for you. There is a bit of a struggle of focusing on what the other person is going to gain.
Can you give an example? Are you talking about housing developments?
In property development, for instance, there is a tendency now on the city administration’s point of view to focus on what a developer is going to gain financially rather than them focusing on what the city is going to gain. The focus tends to be on the wrong place.
Next question: The significance of Presentation College?
Any community doing well has a college presence: Jackson, Worthington, Mankato, and Rochester, for example. They all have a college presence. While Fairmont had always hoped for a college, the timing was never right or there was never enough money in the state budget. Presentation College will be a real asset. We had the opportunity to meet the president of the college, Lorraine Hale. She’s marvelous, talented and driven.
When we built a new bank building in Truman, Shelli Lampi, the campus director, was interested in using our old bank’s work and teller stations and furniture.
I was impressed with the president of the college and how well she had done her homework. She is doing what our businesses are doing: trying to grow to a bigger market, provide more services and reach out. They realize they must grow and can’t sit still as a small college with one campus in South Dakota. I thoroughly understand what they are doing because Profinium Financial is trying to do the same.
Healthcare now has a major presence in Fairmont, with the Mayo hospital and clinic, and with Orthopedic and Sports Medicine. There is a shortage here for nurses. I served on the hospital board a number of years and watched how Rochester hired people from Austin, Austin from Albert Lea, and Albert Lea from Fairmont. It would work right down I-90. Ultimately we would become affected by a shortage.
Fairmont’s new aquatic park: Did you support the use of city funds to build it?
I’m an avid swimmer. When Fairmont had an indoor pool I swam laps at least three times a week. Sometimes local governments must support these sorts of things because they aren’t going to make money. When they closed the indoor pool for the aquatic park I still needed to swim, so I put a lap pool in my home. It has a pump and you just swim in place. That just goes to show you how silly I am if I’m crazy enough to spend that much money to swim in place.
My pool is seven foot by fourteen foot. It has a variable-speed pump that pushes water to create a current. It’s like using a treadmill. So obviously, if I’m willing to spend that much money for that, it wouldn’t hurt me to spend tax dollars for an outdoor pool.
Personally, the outdoor aquatic park is great, but in my mind it doesn’t serve the purposes of the exercise nut or senior citizen. This is Minnesota, a place not environmentally conducive for outdoor swimming eight months of the year. At the time I thought it was a mistake for the city to abandon its indoor pool, but that was its decision.
You’ve invested heavily in agriculture. Describe the scope and operations of Krahmer Inc.?
The farming operation is in Faribault and Martin counties, but primarily Martin. Farmers traditionally don’t talk about how much they farm and how big they are. I suspect most people think we are bigger than what we really are. I have a couple of farms where I share rent. I have my own equipment and own Rippe Elevator, also known as Martin County Grain, which is primarily for my own use. We have made it into a mix mill, so we do our own mixing and grinding of hog feed for delivery primarily to our own hogs. We have three great full-time employees, plus part-timers in spring and fall, and Larry Swanson, the general manager. The size of my family farm in acres and pigs has been a fun source of speculation and ambiguity. I think I will preserve that here.
Larry Swanson runs it for you?
I liken him to our CFO.
What qualities in him do you admire?
Larry is honest and honorable. He has a strong ability to deal with people. He can very quickly figure out their strengths and weaknesses, work with them and get them focused. He deals with many different types of people, from people cleaning hog barns to the people in charge of farrowing operations.
What is your take on federal farm subsidy payments?
Realistically, everybody would just as soon not have them. Unfortunately, there would be a lot of real hurt in agriculture and rural communities if they weren’t there. I do a fair amount of farm tax returns. It’s a rare farmer that makes money after separating out government payments. It’s the old chicken and the egg problem—How do you get out of this without creating a lot of economic turmoil. How do you wean people off?
Some years ago my wife and I took an agricultural tour to New Zealand and Australia. One evening we heard a presentation from a number of farm people and politicians. New Zealand was having an economic struggle and agriculture is a big part of their economy. We were told that one night on TV their prime minister came on and said government payments and subsidies for farmers would end effective that midnight.
Then our hosts told what happened next. It didn’t take long for everybody—from the real estate people, to the bankers, farmers and merchants—to figure out that they were all in it together. They sat down and figured out how [life without subsidies] would work. New Zealand didn’t have a mass exodus from agriculture. It didn’t have foreclosures. Many farmers figured out alternative means of income. They opened bed & breakfasts and grew alternative crops. At one farm we stayed at the farmer raised sheep with big curled horns, got them mean, and turned them loose into the hills for people to hunt. Those rams were so mean they would run into your car. He found his niche.
These farmers were also very careful to say that New Zealand was a small country, and that had made it easier for them to withdraw subsidies. I’m not sure their method would work in the U.S.
I don’t know how to get out of it. You have the issues of economics and politics. You have the issue of the federal government wanting to preserve a food production system. We’re not unlike the European countries. But it’s very close to heart for us to have our own food production system and not rely on someone else.
How important is the new CHS soybean processing facility to your business?
It’s been a positive development in general because prices are better. It creates some problems for Cargill and others though. But things always change. Our beans go there and the plant sends oil out. We buy soybean meal from the plant for pig feed. It’s convenient for us because we don’t have to drive to Mankato or Iowa to get meal.
Anytime you can figure out how to use our farm products for alternative markets I think it’s a good situation.
Coming back to the topic of subsidies, you have to judge them case by case. Today people are using soybean oil in diesel fuel. The government has a program where it will subsidize the farmer for buying this type of fuel by paying them a certain amount per gallon to help compensate for the higher price. So is that subsidy good or bad? To me it’s encouraging a business that likely is environmentally better. And it keeps money here. The problem is once you start a program like that, how do you get rid of it? That’s always been the problem.
Profinium Financial: How did you arrive at the name?
Not long ago we came to the conclusion that we needed to combine the banks in Truman and Fairmont into one entity. This was finalized a year ago. To come up with a name we asked for input from employees and staff. We set criteria. One was the name couldn’t be a winner for one and a loser for the other. Second, we wanted a name broader than our then current markets. That left out using names including Truman, Fairmont or Martin County. We wanted something broader. Lastly, we wanted a unique name nobody else was using. If you go on the Internet and type in almost any name you will be amazed at how many people are using it. Other names have connotation you don’t want.
Someone at the bank came up with the idea of Profinium by combining parts of “PROfessional FINancial services for the new millennIUM.” It was a struggle implementing, though. There is a lot of feeling when you’ve had banks in Martin County more than a century.
Perceptions that a new name would mean a change in us as an institution. In reality it was a harder struggle for the staff than for most customers. We all felt the customers would have the real struggle, but there were really few.
Were you afraid your customers would perceive that a larger, national company had bought out your banks?
Yes, or that we had lost our local touch. We had a few Martin County customers really hung up on it and still are. It’s the same company and people. But overall the transition went well. Again, the staff probably had the most difficulty. We had a plan and set up a marketing program. I can remember very well our introductory meeting. We gathered all the staff and spouses at the Fairmont Holiday Inn to introduce the name. Only a few then knew what it was; we’d managed to keep the secret to a select group. We had champagne and a birthday cake, and a presentation of the name. I thought for sure that in particular one fellow, now retired, would absolutely dislike the new name. When we ended our presentation and were having champagne, and Dennis walked over and said, “I like it.” I looked at our CFO, Mike Bissen, and said, “We got it made.” (Laughter.) If we could sell him, I thought, we could sell anyone. People now are buying in and accepting it.
We wanted a unique name, which we have trademarked. My son types “Profinium Financial” into Google every so often and sometimes a name pops up. So far we haven’t seen the name used as a business.
You are a housing and land developer?
I own farmland around Fairmont. I have some on the east side near Shopko that we’re trying to develop and on the southwest side where we used to operate a par-3 golf course. Our golf course worked all right, but the golf course business has fallen on difficult financial times. The course was in need of repair so we closed it. Now we are in the process of converting it into higher-end lots. Everyone buying a lot can have at least one green; all it needs is reseeding. The peat base and sand are still there.
The golf course development is in the platting process. We have the plat approved and are getting the road designed. We haven’t done anything yet with the other property. I’d like to see what happens with the first phase. It’s only four lots, but four big ones of more than two acres each. I&S Engineers & Architects is helping us design it. We also have plans with them for the other property. Part of the problem we have with both properties is the lack of city water or sewer.
Over the years, I’ve been involved in residential and commercial development in Fairmont on the east side, but not recently. So I’ve done this before. My father was involved too. The area from Hy-Vee on south is all development done by us.
What’s your greatest frustration doing a housing development?
The biggest is what I mentioned earlier. I think people are reluctant to have change and if the property has been a farm they think it should always be a farm. To say it’s going to be homes or something different is difficult for some people. The frustration from that comes from the way city fathers handle the complaint. Do they handle it well or do they just react?
The rules for development are frustrating but they have to be there. You have drainage rules, setback rules. They are frustrating, but I understand them. You have to have order.
Another thing Fairmont struggles with: In the past our entrepreneurs lived in town and could get together and decide how to move certain projects forward. As our economy has changed, now all of a sudden you don’t have your entrepreneurs in town. You have companies from out of town. So now who leads the charge? How do you get this catalyst, this group of people, who know how to move and shake projects forward? This is something a lot of communities struggle with, not just Fairmont. In the old days a half dozen fellows would get together and form a coalition. That group isn’t around anymore. And I don’t know if you can get it going.
You are the sole owner of Profinium and Krahmer Inc.?
My son, wife and I own Profinium. I own 100 percent of Krahmer Inc.
Does your son take over Krahmer Inc. one day?
He does a lot of it now and enjoys it. He wants to stay in the area and be involved in the businesses.
You are Fred C. Krahmer. What does the “C” stand for? Do people confuse you with son Fred W.?
The “C” stands for Charles. My son is Fred W. and a good Democrat. We have fun around the office here referring to him as “W,” as in George W. Bush. It drives him absolutely nuts.
Is he still Martin County DFL chair?
Yes. Fred has always been interested in politics. Martin County is about as non-Democratic and pro-Republican, at least on the surface, as you can get. He and I are both convinced though that people here are not as Republican as they say. So he became involved with the Democratic Party.
It can be difficult mixing politics and business. It’s more difficult the closer the politics is to home. If you’re a city council member or county board member you get more flak on your business than if you’re a national politician. Being state representative causes more problems than being a U.S. senator.
I watch how Fred W. deals with very conservative people. He’s very good at keeping it on a good level and sorting out social issues and economic issues. Maybe being involved in business helps a Democrat. You disarm the rabid conservative right off the bat when you’re involved in business. But once you get to the national level I’m not sure that’s true.
What do you mean about disarming conservatives?
Conservatives think Democrats want to raise hell with business. By being involved with business you disarm that attitude. On the Democratic side you can have good social issues you want to deal with and be very economically minded and realize that’s important to the equation too. I believe we tend to paint both sides too black and white.
Personal question: Why did you and your son go away to high school in Faribault?
My father went to Shattuck School primarily because he didn’t have any parents and his older brother thought it would be a good for him. And it was. Going there became a family tradition. He went there, and I’d grown up thinking it was a place I’d like to attend. I’m glad I did. When I went there it was a military school. I was the second lowest rank in my class, but still thought the military aspect was fine. I just wasn’t into it. I like to think I needed a little more focus and discipline in life, which Shattuck gave me.
For my son, the third generation, it was a family tradition. Would it have made any difference for him if he’d remained in Fairmont? No. The education would have been similar. Shattuck-St. Mary’s provides exposure to a whole world of people. More than a quarter of the student body is made up of foreign students, and it has students from all parts of the country. That is great. My grandson is a seventh grader there.
What do people in town think of you sending your children there? Do you think they’re saying, “I guess our schools aren’t good enough for them?”
Do I think that? Some may think that. I don’t. People who know me don’t believe that. I know there are some who think kids go there because they are ‘problem’ kids or misguided and need direction. What they think is what they think.
Changing gears: What character trait do you dislike most in people?
There are two and they fit together. The first is I don’t like it when a person isn’t trying their hardest or doing their best—the result isn’t so important. If someone is coasting along, I struggle with that. The second is you don’t quit. You keep trying and don’t give up. It’s a real struggle for me when I see people quitting.
How does your law background help you run your other businesses?
When I got out of law school, I really didn’t know a lot about law. But what law school did was teach me how to think, how to look at problems, how to break them apart, how to find the pieces, and how to analyze and resolve a problem. That’s what a law school education did for me rather than the actual learning of law. It taught me how to think.
I’ll always remember touring the high school in Fairmont along with the Rotary. We went through the vocational department. A fellow walking alongside me ran a machine shop. I asked him what he thought of the vocational program. Bob said, “All their equipment is obsolete. That really isn’t a problem except they shouldn’t be teaching the students how to operate the machine. Instead, they should be teaching the students how to learn how to operate the machine, so they are ready when they get out to my place.” That’s what law school did for me. It gave me the process rather than the answers.
I get asked often how I keep all these different ventures straight. To me it’s really very easy. I have great people around me. We believe in building our culture by hiring the right people. It may sound trite, but it’s so true. Whether it’s Larry, Duane, Gary, Brian, John, Bobby, Ove or Shirley, the list is endless—they are all just great. My philosophy is just to turn them loose; and give them the authority and challenge. If you’re going to entrust your business to them, you have to give them the authority to make decisions. If you don’t, forget it. They won’t have any reason to make a decision because you will make it for them.
And your business will grow only so far as your span of control?
Yes. One time I was out on the farm. I saw this fellow pitching pig manure and knew there was a better way to do it. But I realized that if I told him the better way, he would just hand me the fork. So I figured I’d let him continue doing it. (Laughter.) And sometimes you find out people have a better way of doing it than you.
Rank Your Bank
The lists below show two types of area banks.
The first shows banks with total assets of more than $75 million headquartered in the nine-county region around Mankato, which includes Sibley, Nicollet, Le Sueur, Blue Earth, Brown, Watonwan, Faribault, Martin, and Waseca counties. These numbers were taken October 1 from Minneapolis Fed and Office of Thrift Supervision websites. The Minneapolis Fed lists 54 banks in our nine counties. The State Bank of Ceylon (Martin County) is the smallest with assets of $10.5 million.
The second list shows banks headquartered outside our nine-county area having assets greater than $75 million at branches inside. Because the Minneapolis Fed does not break down assets by county from banks headquartered outside our area, the numbers for these are estimates from local bank sources.
Banks headquartered in nine-county region (Assets in millions of $)
Bank — Headquarters —Assets
Bank Midwest Minnesota — Fairmont — 378.6
Alliance Bank — New Ulm — 358.3
Wells Federal — Wells —223.5
Citizens Bank Minnesota — New Ulm — 201.2
Profinium Financial — Truman — 192.5
Roundbank — Waseca — 191.0
Pioneer Bank — Mapleton — 150.1
First National Bank St. Peter — St. Peter — 124.8
First Security Bank — Sleepy Eye — 124.5
Americana Community Bank — Sleepy Eye — 119.8
First National Bank Waseca — Waseca — 117.4
Valley Bank — North Mankato — 114.2
Nicollet County Bank — St. Peter — 110.1
Security State Bank — Mankato — 105.1
ProGrowth Bank — Nicollet — 104.7
Community Bank — Vernon Center — 90.2
Valley Bank & Trust — New Ulm — 87.1
Cornerstone State Bank — Le Sueur — 83.4
First Farmers & Merchants — Le Sueur — 83.4
Minnstar Bank — Lake Crystal — 81.5
Banks headquartered outside nine-county region with significant assets inside region
Bank — Headquarters — Assets in region
Wells Fargo Minnesota — Minneapolis — 525.0
USBank — Minneapolis — (Numbers not made available.)
Getting To Know You: Fred C. Krahmer
Born: Sept. 12, 1942, in Fairmont.
College: Graduated from the University of Minnesota in 1964; University of Minnesota Law School, 1967.
Personal: Married to Connie; three children, Kristen, Fred W., and Cheryl.
© 2004 Connect Business Magazine. All Rights Reserved.