Two community banks - separated by about 100 miles and state border - have formed data processing center on the Florida panhandle that they hop eventually will serve banker throughout the Southeast.
The company, called First Banking Services, now handles all the back-office tasks of its owners - First National Bank and Trust, Fort Walton Beach, Fla., and First Bank and Trust, Grove Hill, Ala.
The two institutions are speaking with about 10 other banks in four southeastern states about signing them up as part owners or simply as users, the owners said.
The company, based in Fort Walton Beach in a former grocery store attached to First National, is part of a growing trend of service centers owned by member banks.
A similar venture was launched two years ago in Asheboro, N.C., and several community bankers in central Florida began organizing a data processing company earlier this fall.
These arrangements appeal to community bankers as a way to compete with their larger, technologically advanced brethren.
"This is like two people buying a boat together and both using it,' said company president Larry Beasley, a vice president at $195 million-asset. "By pooling our resources, we could buy a larger and more complex. system at lower cost."
The company, which started processing about a year ago, handles statement mailings, check filings, inquiries, and research for the two banks.
For its services, the company will charge user banks $140 per month for every $1 million of assets.
The organizers - Mr. Beasley and John F. Gittings, president and chief executive of $120 million-asset First Bank - envision the company offering other services, such as compliance, auditing, and wire transfers, to banks in the area and potentially throughout the Southeast.
"Anything that we can move out of the bank and into the company, we'll do," Mr. Beasley said.
The two founding banks have invested more than $2 million to make their idea a reality.
"Our full-blown plans are to add at least one or two banks a year," said Mr. Gittings. "If we can get the Southeast thing going, there's no limit to what we can do as long as there are community banks. We've talked to institutions as large as $400 million and as small as $5 million."
One expert said the venture has its work cut out for it.
"It's hard to make a cooperatively owned data processing center work," said Richard Crone, a senior manager in the financial institutions consulting group at KPMG Peat Marwick in Los Angeles.
"Disagreements are likely to arise over what services the cooperative should support and what should be the parameters of those services."
He said the real challenge for such enterprises is to get enough volume and critical mass to justify the costs of setting up the cooperative.
Without enough members, the cost per account is likely to be higher than simply outsourcing to an established vendor.
