After setting up shop in six new markets across the country last year, The Bankers Bank in Atlanta is readying itself for even more expansion.
Tom Bryan, the president and chief executive officer of the $2.2 billion-asset subsidiary of Community Financial Services Inc., said it filed an application last month to exchange its Georgia charter for a national one, to make it easier to enter new markets.
"As a state bank, you are required to obtain permission on a state-by-state basis to do business there," he said last week. "As a national bank, you only have to get permission from the comptroller of the currency."
Regulators said the new charter also would give the bank more liberty to expand its customer base beyond other banks.
The added freedom of the national charter, coupled with the Atlanta bank's reputation for aggressive growth, had some industry watchers wondering if the bank intends to expand more than just its geographical reach and begin making loans and taking deposits from the public.
Mr. Bryan adamantly denies such plans. "Even though our charter is changing, we are not changing our business model, and we won't compete with customers for loans or deposits," he said.
Like the other 20 bankers' banks across the country, the Atlanta one offers a range of services - from correspondent lending and brokering deposits to strategic planning, management consulting, and loan reviews. As the largest of that specialized breed of banks, it provides support to about 1,200 banks in over 30 states.
Of the 21 bankers' banks, none have publicly expressed an interest in broadening their customer base. In fact, most have said they strongly oppose such growth.
Still, Kara Handzlik, an attorney with the Federal Reserve Board, said it changed its interpretation of Regulation D recently after some bankers' banks and others in the industry privately expressed an interest in expanding their customer base. Under the new interpretation, the Fed will consider allowing bankers' banks to solicit customers from outside the financial services industry on a case-by-case basis, though it did not specify who those customers might be.
Ms. Handzlik said the Fed still does not allow bankers' banks to do business with the general public, and bankers' banks still have to obtain permission from their chartering authority before the Fed's consideration.
Kevin Mukri, a spokesman for the Office of the Comptroller of Currency, said that from its perspective, a bankers' bank with a national bank charter has the same powers as a traditional commercial bank.
The Atlanta bank would not be the only bankers' bank with a national charter. Bankers' Bank of Kansas in Wichita chose one when it was organized in 1988 because no Kansas bankers' bank charter existed at that time, said Bruce Schriefer, its president. The three bankers' bank subsidiaries of First National Bankers Bancshares Inc. of Baton Rouge also have national charters.
Nor is the Atlanta bank the only bankers' bank to pursue a nationwide expansion. TIB-The Independent BankersBank in Irving, Tex., has been broadening its geographic reach. It now operates in nine states. Last year it opened two offices and acquired a card servicer, and last month it announced a deal to establish a full-service branch in California by acquiring a charter there.
The 21-year-old Atlanta bank has been more aggressive in its expansion; it now has 13 out-of-state offices. Last year it opened offices in Los Angeles, Seattle, Denver, Boston, Chicago, and Cincinnati. Most of its offices are loan production offices, where the bank participates with community banks on loans larger than their lending limits.
Its assets increased 26% last year, and it has set a goal of reaching $3 billion of assets next year.
Mr. Bryan said that the bank has no specific expansion plans on the drawing board for this year, but he made it clear that it is not done moving into new markets.
"There may be a couple more markets in the middle part of the country where it would make sense for us to put people on the ground," he said. "Our long-term goal over a 10-year period is we want to be known as America's correspondent bank."
Though opening offices around the country has been its strategy so far, Mr. Bryan has not ruled out acquiring another bankers' bank to accelerate its growth.
