ABA Banking Journal - August 2007 - (Page 36)

CORRESPONDENT BANKING grounds for outsiders. Multiple bankers’ bank players slug it out for correspondent banking business in such states. It can get fierce in these markets. But bankers’ bankers take some of this in stride. “We all go out and compete for business brought to us by a community bank, and we have competitors whom we consider ‘friendly’ competitors,” says John Schneider, Jr., vice-chairman and CEO, Independent Bankers Bank, Ill., “and there are other more aggressive bankers’ banks who probably stretched the definition of a ‘bankers’ bank’ a little too far.” Bankers’ bank “coopetition” While competition and aggressive expansion mark the bankers’ bank sector, there is also a picking and choosing going on. Clearly, while larger bankers’ banks have diversified their services somewhat, some basics of the business haven’t changed. Item processing tends to be a breakeven proposition at best, players say, part of the ante to be in this slice of banking. Credit-based services still pay the bulk of the freight, according to Jon Evans, president and CEO at Atlantic Central Bankers Bank and head for this year of the Bankers’ Bank Council, a loose association of most of the bankers banks. Some banks have exited lines that they feel they can’t provide to customers profitably, leaving the field open to other bankers’ banks, and in other cases they have chosen to partner to jointly offer some services. Examples of coopetition include: • Securities teamup: Five bankers’ banks that own and use the services of Bankers’ Banc Investment Services, which is the name of the former First St. Louis Securities, Inc., acquired in late 2006, and now doing business as First Bankers’ Banc Securities, Inc. (The five banker’s banks include Midwest Independent and Nebraska Bankers Bank, both part of the same holding company; Independent Bankers Bank, Ill.; The Bankers’ Bank, Oklahoma; and BBOK Bancshares, Inc., holding company for $99.6 million-assets Bankers’ Bank of Kansas, N.A.) The investment securities firm, specializing in fixed-income securities, was already doing business with banks in 15 states at the time the initial stage of the acquisition took place. “I’d like to think that this is the direction where things are headed, working with like-minded bankers’ banks to serve the community bankers,” says Illinois’ Independent Bankers Bank John Schneider. • Lending teamups: Bankers’ banks can partner with other bankers’ banks for lending packages that can be participated among their members. Bankers’ Bank USA’s President and CEO Ron Slater notes, for instance, that his $287.1 million-assets organization, based in Wisconsin, has been developing commercial real estate loans around the country, and partnering with other bankers’ banks in the region where the credit is based. This effort started through the organization’s Wisconsin and Iowa Community Bank Loan Network and began expanding in 2000 in partnership with five other bankers’ banks. It is handled through Bankers’ Bank USA’s BB Syndication Services operation today and expanded beyond the five banks initially selected as partners. Last year the operation put together a package that included more than 100 community bank participants. • Technology teamups. Three bankers’ banks—Atlantic Central; Independent Bankers Bank, Illinois; and Independent Bankers’ Bank of Florida, with $394.9 in assets—partner together to offer certain technology services. More of this type of thing is coming. In the longer term, technology promises to continue to be a growth area for bankers’ banks, especially in the checking arena. A growing number of bankers’ banks offer, or are working on programs, for “On-We” item processing. This is an electronic substitute for the traditional local clearinghouse. As technology continues to wear away at the concept of “locality,” some think that the individual bankers’ banks “On-We” efforts could interconnect, essentially creating an alternative, less-expensive system for clearing that’s designed for community banks. Large banks have enjoyed such savings for decades, points out Peter Sposito of Bankers’ Bank Northeast, and the savings realized locally among participating banks could increase as networks interlink. In its 2006 annual report, Minnesota’s United Bankers’ Bank, $333 million-assets, reported that it was working with other bankers’ banks and with larger regional banks to set up exchanges between its OnWe systems and their systems. Seven of the nation’s bankers’ banks have set up On-We networks through LendingTools. www.ababj.com/subscribe.html 36 AUGUST 2007/ABA BANKING JOURNAL http://www.bankersbankusa.com http://www.bankersbankusa.com http://www.bbok.com http://www.ibbfla.com http://www.ibbfla.com http://www.bankersbankusa.com http://www.ubb.com http://www.ubb.com http://www.bankersbankusa.com http://lendingtools.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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