Back in the 1970s and 1980s, Twin Cities entrepreneurs learned that there was a little bank at the corner of Cedar and Riverside avenues in Minneapolis that had a big heart.
“The best referral source we had was other banks,” says Dave Cleveland, who founded Riverside Community State Bank in 1973. “They’d say, ‘I can’t help you, but go see the guy at Cedar-Riverside who has cowboy boots and monogrammed shirts.’ ”
By helping entrepreneurs build their businesses, Cleveland built one of the most respected and successful small banks in the Twin Cities. In time, Cleveland’s start-up bank became the first of five Riverside Bank branches throughout the metro area.
Cleveland launched Riverside after a 15-year career that included top jobs at banks in his native South Dakota, as well as in Montana and Wisconsin. What brought him to Minnesota was the opportunity to launch his own institution. At the time, Minneapolis designated the Cedar-Riverside neighborhood a special redevelopment district, and Riverside was envisioned as the bank that could help turn it around. Under Cleveland, it helped boost Cedar-Riverside’s fortunes, as well as those of small businesses in and outside of the neighborhood.
One of those entrepreneurial concerns was Landscape Structures Inc. (LSI) in Delano, which worked with Riverside for 20 years, until the company, as Cleveland puts it, “happily outgrew” the bank. A manufacturer of innovative playground equipment launched in the founder’s garage in 1971, LSI now has more than 300 employees and ships merchandise all over the world.
“We found Dave Cleveland when someone referred him to us as a great guy who liked small businesses,” LSI founder and chairman Steve King says. “He understood us and he took some risks as a banker to help us get two SBA loans. He was a great help and a friend. He still is a friend.”
Besides helping small businesses like LSI succeed, Cleveland built an institution that boasted a 2 percent after-tax profit from 1989 to 1999. “It was the best return in the nation,” Cleveland says. “We averaged 28.80 percent return on equity and grew 30 percent a year.” In generating those numbers, “we proved that you can be hugely successful by doing business with entrepreneurs.”
Cleveland attributes that success to two things. First, he and his officers were willing and able to help entrepreneurs run their businesses, writing business plans and offering advice. “The person making the decisions every day is the person who decides whether or not I get paid,” he says. “I believe to this day that I can tell whether a company will be successful or not by looking at owners’ personal financial statements, because it tells me what kind of people they are. If it’s accurate, that says that they’re honest.”
Cleveland also would meet with borrowers quarterly, at least once at their places of business. “I can’t judge whether a factory is set up right,” he says. “I can’t get to know every kind of business. But I can tell whether or not the borrower understands it.”
The faith that Cleveland had in his employees equaled the faith he had in his borrowers. Kate Barr, currently the executive director of the Minneapolis-based Nonprofits Assistance Fund, worked for Cleveland for 22 years, becoming Riverside’s senior vice president. “Dave hired people, often young, smart, capable people, and gave them a lot of room to grow, take responsibility and develop into leaders,” Barr says. “There are bankers and businesspeople around the Twin Cities who got started because Dave believed in them.”
In 1999, nearing retirement age, Cleveland sold it to the much larger Green Bay-based Associated Bank for four times capital value. “At the time, banks were bringing in about 1.25 times capital,” he says. “We started with $1 million, grew to $25 million in capital, and sold for $100 million.”
After the deal, Cleveland remained in banking, retiring in 2004. After that he served as a consultant to troubled banks and was vice chair at Village Bank in Blaine. He continues to support Twin Cities entrepreneurs through the Minnesota Cup, which he and his wife, Carolyn, endowed in 2005. It is a source for business planning support, mentorship, investor feedback and connections through more than 350 volunteers and 60 sponsors and partners. In short, it gives much of the same help Riverside Bank provided to fledging firms under Cleveland’s leadership.
“Dave is amazing,” says Scott Litman, co-founder of Minneapolis-based marketing agency Magnet 360 and a co-founder of the Minnesota Cup. “He’s spent a lifetime spurring on entrepreneurs, and he brought in Wells Fargo and helped solidify the University of Minnesota as a [Minnesota Cup] supporter. Dave was the linchpin.”
Looking back on his time at Riverside, Cleveland says that “I had an unlimited supply of people who had ideas and needed money, so I could take my pick. It was a lot of fun.”