Title: At 25, Bankers' Bank Concept Meets Needs Old and New
Abstract: Questions and answers about a very adaptable source of help for banks Back in December 1975, the Independent State Bank of Minnesota opened. The debut of a bank wouldn't ordinarily be special enough to warrant a lookback, but this was a bank with a difference--indeed, such a difference that it took an act of the Minnesota legislature to birth it. Independent State wasn't a community bank. It was founded as a bank for community banks, that is, a bank, the first of what are now 18 such institutions nationwide, representing a total of more than $3 billion in assets. Bankers' banks, historically identified with the independent bankers movement but now considered wider in appeal, provide correspondent banking services to, and are owned by, community Bankers' banks are not linked with the government. Several factors had led to the formation of these specialized institutions, but the main ones were dissatisfaction with the service offered by correspondents and fear of competition from same. Today the Minnesota institution is known as United Bankers' Bank and it has expanded its marketing activities into four additional states (Iowa, Mont., N.D., and S.D.) under Bill Rosacker, president and CEO. And the idea has spread elsewhere. A bankers' bank is the only noncompeting provider of service, says Ronald L. Slater, president and CEO of Bankers' Bank of Wisconsin, which serves Wisconsin and Iowa. We're limited to doing business with banks, bank holding companies, bankers, and directors. Both by charter and bylaw we don't compete at all for retail service. Not all banks that could avail themselves of bankers' bank service do so. In some cases this is because of entrenched ideas of who a bankers' bank is for. The remainder of the article presents answers to questions bankers might have about bankers' It is a distillation of information from bankers' bank execs, community bankers, and the web. Q. I've been under the impression that bankers' banks were really only for smaller community A. This varies. Some bankers' bank chiefs acknowledge that their customers sometimes graduate. You do, sometimes, outgrow your provider, says Rosacker. However, others maintain that community banking is a philosophy, not a matter only of size, and that they can lust as easily serve larger community Down south, for instance, the Independent Bankers' Bank of Florida serves customers as large as $1 billion in assets, according to James McKillop III, president. He expects this to continue because banks of all sixes are increasingly looking to outsource functions to save on costs. Q. Why should even think about getting involved with a bankers' bank if I've managed without one up until now? A. One New England community banker we spoke with has watched her bank's correspondent business move from one big provider to another over the last decade or so, as various big banks dropped that kind of business or merged. She is now thinking of shifting at least some of her bank's business to the three-year-old Bankers' Bank, Northeast, the youngest of the 18, based in Glastonbury, Conn. I would never, ever, put all of my eggs in one basket, and no one entity can provide everything, this banker says. But do think the bankers' bank is here to stay, because it adds an alternative and a layer of protection for community banks. Q. already joined the Federal Home Loan Bank in this area. Why do have to consider adding another provider to the list? Besides, aren't bankers' banks competitors with the home loan bank system? A. Back when Federal Home Loan Banks were first allowed to admit commercial bank members, some of them made an aggressive grab for correspondent banking business and that caused a fair deal of bad blood, some of which hasn't been forgotten. Even today, some of the home loan banks still provide certain correspondent banking services. …
Publication Year: 2000
Publication Date: 2000-12-01
Language: en
Type: article
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Cited By Count: 2
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