First Banks Inc. is counting on a small bank in Chicago to help it connect with Hispanics in its other markets.
The $8.5 billion-asset St. Louis company announced last week that it had agreed to buy the $74 million-asset FBA Bancorp Inc., which caters to Hispanics, for $10.5 million in cash.
Allen H. Blake, First Banks' president and chief executive officer, said it was attracted by FBA's markets and customer base. Many banks, big and small, have been buying or building in Chicago, and Hispanics are the fastest-growing segment of the U.S. population.
First Banks has nearly 170 branches in Missouri, Illinois, Texas, and California. Mr. Blake said its branch managers, eager to reach Hispanics in their markets, are already asking about implementing some of FBA's policies.
For example, FBA lets immigrants use matricula identification cards issued by Mexico to open accounts; First Banks requires a valid U.S. identification. FBA also lends to immigrants without Social Security numbers if they have taxpayer ID numbers issued by the Internal Revenue Service.
Similar policies could work well in some First Bank branches, Mr. Blake said. His company will take a closer look after the sale closes, he said. It is expected to do so next quarter.
"They've got some things that are kind of unique, which would be good in Texas and California," he said.
FBA was founded in 1998 by a retired banker, David Voss, who saw an opportunity to meet the needs of the growing population on Chicago's South Side of immigrants from Mexico and other Latin American countries. In addition to letting them use alternative IDs to open accounts and borrow, FBA offers a dual-debit-card account; relatives abroad can use the second card to withdraw funds.
Michael A. Frias, a community affairs officer with the Federal Deposit Insurance Corp. in Chicago, said FBA is a "pioneer of alternate IDs and remittance products."
Because the Hispanic market is still new to many banks, "more and more domestic banks are going to buy Hispanic-oriented banks to acquire their skills," Mr. Frias said.
If projections are right, banks are going to need those skills. In 2003, TowerGroup, a Needham, Mass., unit of MasterCard International, estimated that 70% of organic growth in U.S. financial services could come from the Hispanic market over the next five years. And the Census Bureau predicted last March that the U.S. Hispanic population will grow 188%, to 102.6 million, by 2050.
Pamela S. Voss, the widow of FBA's founder, is its president and CEO. She says it had always intended to enter other states, including Texas and California, but could not grow fast enough to afford to.
Mr. Blake said First Banks will keep as many FBA employees as possible and use the deal as a springboard to expand in Chicago. FBA's three branches are all at least five miles from First Bank's 23 in the city.
In November, First Banks bought CIB Bank Chicago for $67.4 million in cash from the $2.6 billion-asset CIB Marine Bancshares Inc. of Pewaukee, Wis.
