In 1986, The Bankers Bank opened its first office in Atlanta and began serving banks across Georgia.
Eight years later the correspondent bank opened its first out-of-state office, in Alabama, to offer its services to banks in that state. In the years since it has expanded into North Carolina, Tennessee, and Florida.
Now the $1.9 billion-asset bank is aiming to go nationwide. Six months ago it opened its first office outside the Southeast, in Chicago, and this quarter it plans to open one in Maryland. Tom Bryan, the bank's chief executive officer, said it is also eyeing the Phoenix area as a base for developing relationships with community banks out west.
"Our long-term objective is to have a national presence," Mr. Bryan said. "We want to be known as the largest and most dedicated provider of correspondent banking services in the country."
Like the other 20 bankers' banks in the country, The Bankers Bank offers a range of services - from correspondent lending to brokering deposits to strategic planning and management consultant assistance to loan reviews. It is owned by the roughly 1,200 banks that use its services.
Unlike the others, though, it is the only one pursuing a national model - and it is not shy about entering markets where bankers' banks already operate. Illinois, Alabama, Florida, and Maryland have other bankers' banks vying to meet the correspondent needs of community banks.
"There used to be gentlemen's agreements that one bankers' bank would not compete in those markets where there were other bankers' banks," Mr. Bryan said. "But we eventually broke this rule. We perceived that there was a need and plenty of business for all the bankers' banks, and we also felt we got a mandate from our shareholders."
His bank, already the largest of the bankers' banks, has set a goal of having $3 billion of assets by the end of 2008, and to increase earnings per share by 10% annually. Last year its earnings per share rose 12% from 2004 and 23% from 2003, to $164.11, Mr. Bryan said.
Demand is driving the expansion, he said - the Southeast, Illinois, and the western states have been hotbeds for start-up banks in recent years, and many need the services of a bankers' bank.
Also, as regional banks continue to get larger, small banks need to make larger loans to compete, and they can do so by partnering with a bankers' bank, Mr. Bryan said. The big advantage for his bank is that, because of its size, it has higher lending limits than other bankers' banks.
Richard Hook, the chief executive officer of Maryland Financial Bank in Towson, said he views the Atlanta bank as "friendly competition."
Founded in October 2004, Maryland Financial has just $49 million of assets and significantly lower lending limits than the Atlanta bank. Mr. Hook said community banks in Maryland can only benefit from having access to the products and services of two bankers' banks.
"There is more than enough business to go around, and we will also be working together in a lot of areas as well," he said.
Jim McKillop, the president and CEO at the $396 million-asset Independent Banker's Bank of Florida in Lake Mary, said that even though the Atlanta bank has had an office in Florida for about a decade, his bank is still the dominant bankers' bank in the state, with 260 clients.
"We have a totally different philosophy [than The Bankers Bank] and do not believe that we have to grow bigger and bigger. Our objective is to stay efficient and use shareholder's capital wisely," he said.
Mr. Bryan said his bank looks to enter growing states and picks locations within a three-hour drive of most of a region's community banks. (In addition to Atlanta, its Southeast offices are in Birmingham, Ala., Nashville, and Tampa.)
After it sets up its Arizona office, the bank would have most of the country covered and would hold off opening new ones for a while, he said.
Just in the first four months of this year, seven banks have opened in Florida, six in Georgia, and five in North Carolina, according to the Federal Deposit Insurance Corp.
"In 2005 we sold 1,328 new services to roughly 400 banks in 22 states," Mr. Bryan said. "So the markets are still viable, and there are still plenty of growth opportunities in the states we are in."
