ABA Banking Journal - August 2007 - (Page 34)

CORRESPONDENT BANKING to participate out to The Bankers Bank’s community bank customers and shareholders. This is a sea change from the traditional pattern, which is to let customer banks originate loans and the bankers’ bank participate them to other customer banks. But to have the bankers’ bank do the prospecting and underwriting first, goes against the grain of some. The true believers in the bankers’ bank world have a saying, uttered with variations here and there: “Always Your Partner, Never Your Competitor.” Bryan defends his bankers’ bank’s practice as beneficial to customer banks. His specialty subsidiary enjoys a niche, for instance, in financing larger players in the hotel business. Typically these firms don’t even talk to community-size banks, he points out, so finding a way for them to get a piece of these credits provides volume that they would never see, otherwise. While the nation’s bankers’ banks cluster in the eastern half of the country, their service can be found most anywhere. In our digital edition (www.ababj.com) this map is interactive and helps locate service. Changing competitive picture While The Bankers Bank is the focus of some criticism, the truth is that the competitive dynamic of most of these niche players has been undergoing significant evolution for some time now. “The bankers’ bank has been forced to become a different creature, because of our industry’s need to evolve, and our own need to compete,” says L.D. McDonald, president and CEO of Midwest Independent Bancshares, Inc. His company is parent of Missouri’s $327.4 million-assets Midwest Independent Bank as well as $26.3 million-assets Nebraska Bankers Bank. Factors such as the internet, Check 21, and remote capture have changed the significance of geography, as has continuing industry consolidation. What being a bank entails has expanded, and, so, then, has what being a bankers’ bank entails. Some bankers’ banks offer securities services, some investment banking, some insurance lines or even insurance coverage, such as D&O. Independent Bankers’ Bank, Ill., $472.1 million-assets, even provides bank valuation services, for everything from S corp formations to estate decisions. Specialized technology offerings also play a part in the bankers’ bank evolution. Atlantic Central Bankers Bank launched a special technology subsidiary, BITS (for Banking Infrastructure and Technology 34 AUGUST 2007/ABA BANKING JOURNAL Services) in 2005 to provide voice over internet protocol phone service and related network services to participating customer banks. By the end of this year, ACBB expects to have invested more than $5 million in the operation. And consulting services are becoming more and more important. Internal audit and compliance consulting—essentially, outsourcing—are growing popular, as many banks find that they can no longer afford specialists of sufficient experience and knowledge for some tasks that they nevertheless must get done. At Bankers Bancorp of Oklahoma (parent of $134.5 million-assets The Bankers Bank), its Bankers Professional Service subsidiary not only provides compliance help, but internal, ACH, and information technology audit. The country is wide open Increased competition has been a steady process, ever since an old “gentleman’s agreement” not to market on another bankers’ bank’s home-state turf was broken by the few, and, increasingly, abandoned by the many. “Basically, today, the United States is open from border to border, to any bankers’ bank that wants to compete,” says Tom Evans, president and CEO of Pacific Coast Bankers’ Bancshares. “Some bankers’ banks have national aspirations, and some have very specific geographical approaches.” Evans, whose Californiabased bank includes $525.6 million-assets Pacific Coast Bankers’ Bank plus a bro- ker-dealer, serves customers in California, Arizona, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming. Two recent competitive developments make the point: • Deep in the heart of…California. Texas-based TIB-The Independent Bankersbank, which already serves 1,300 banks in 46 states, announced an agreement in March to buy an existing California bank charter. The $1.6 billionassets TIB, second-largest bankers’ bank in the U.S., has been doing business in California since 2002. Originally founded as the Texas Independent Bank, the organization changed to its current name in 1998. It already had out-of-state offices in California, Louisiana, New Mexico, and Oklahoma. Competition with TIB since its Tulsa office opened caused Oklahoma’s The Bankers Bank to consider directly butting heads with the much-larger institution, but President and CEO Don Abernathy, Jr., says the bank instead has tried to stick to the things it does best. “In five years,” says Abernathy, “we’ve lost only one customer. I would like to think that we made the right choice.” His own bank makes calls in Texas, but he says the bank’s out-of-state customers tend to be part of organizations that are based in Oklahoma. • Midwestern battlegrounds. Iowa, with no bankers banks of its own, and Nebraska, which didn’t have one until 2002, have been competitive battlewww.ababj.com/subscribe.html http://maps.google.com/maps/ms?ie=UTF8&hl=en&msa=0&msid=110234557993246664697.000001129f8ed6be22a22&ll=36.738884,-97.558594&spn=57.077356,90.878906&z=3&om=1 http://www.tibsite.com http://www.tibsite.com http://www.thebankersbank.com http://www.mibanc.com http://www.nebraskabankersbank.com http://www.ibb.cc/index.asp?page+3886 http://www.ibb.cc/index.asp?page+3886 http://www.pcbb.com http://www.ababj.com/subscribe.html

Table of Contents Feed for the Digital Edition of ABA Banking Journal - August 2007

Contents Editor's Column The Unbankers Snapshot: Do Share Repurchases Signal More M&A Activity Sleight of Mind Goals Behind Proposed ABA/ACB Merger ABA Resources ABA Chairman's Position Should You Sell Those Nonperformers Pass the Aspirin Branch Design - Evoking a Sense of Place Two Banks Take the LEED Move Over, Buddy Service Feature: Bankers' Banks Directory Websites: What's State of the Art for Banks? Citi Mobile to Go Strong with iPhone? Date First, Marry Later Mailbox Banker's Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - August 2007

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