Building a national credit card program from a community bank is like making fine wine: It takes time.

In-house credit card operations aren't for the faint of heart. It takes size, economies of scale, lots of people, and lots of equipment.

For this reason, few community banks have pursued credit card lending in a big way, and those that do often rely on third-party marketers and servicers.

Nevertheless, 10 community banks in the country have credit card portfolios that equal more than 10% of total loans.

Executives at these banks say their strategies are highly focused but based on conservative growth. And they insist that they aren't card banks, but genuine community banks.

"We did it gradually," said Tom Paxton, senior vice president and credit card chieftain at Simmons First National Corp., which has one of the biggest credit card loan portfolios of any bank under $3 billion in assets. "We made no big capital expenditures. We just did it gradually. And though it's cost a lot of money to build it up, every year we posted increased profits from it."

Simmons First, based in tiny Pine Bluff, Ark., was one of the first banks to get into credit card lending in 1967, and they've stuck with it through thick and thin. Arkansas usury laws that require banks to charge no more than 5% over the federal funds rate for consumer loans forced it to be one of the most competitive credit card lenders in the country.

Two Chicago area community banks are among the biggest small-bank credit card lenders: Amalgamated Bank and Oak Brook Bank. They share the same investors, but Oak Brook's holding company is publicly traded.

Amalgamated is an odd duck in that it markets services primarily to unions, and its union affinity card makes it a national issuer. Oak Brook Bank, however, started in the business in the early '80s soon after it was formed.

"We wanted to offer a low-rate consumer credit card," said Richard M. Rieser Jr., president of Oak Brook. "We looked at third-party issuers to piggyback on, but no one would do it our way. So, we did it ourself."

Oak Brook contracts out all its back office servicing, but all marketing and customer relations functions are done in house. Others, such as Simmons First, don't.

One thing all the banks share is people who know a lot about the business. Mr. Paxton said his bank has been "real lucky" to hold onto high- caliber financial talent in so small a town.

"If I was to give advice to a community bank that wanted to get into credit cards, I wouldn't necessarily tell them to do it our way," he said. "I would think most banks need third-party issuers to get into it. But one thing you do need is the right people in-house."

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