Cole Taylor Bank is a Chicago-based super community bank with assets of $1.6 billion. Established over 60 years ago, it has positioned itself as the bank for the owner-operated business.

"We have been serving small and mediumsize businesses in Chicagoland for over 55 years," says Jeff Taylor, the company's chairman. "We now have relationships with customers of second and third generations.

"Our customers want consistency and continuity in policy and personnel and decision-making, and we can offer them that."

In the late '80s the company augmented its initial focus by an emphasis on retail banking. Cole Taylor has expanded its branch network through acquisitions and improved its loan mix, increasing consumer loans from 23% to 37% in the past five years.

By staying focused on our core business, we have been able to benefit from the consolidation taking place in Illinois banking," Mr. Taylor says. "We do not target specific industries. Instead we found a profitable niche in identifying the individual businessperson and the good operators in our marketplace.

"There are good businesspeople in any industry, and we target them. We believe we can cherrypick those good operators."

Single-family homebuilders are an example. Three or four years ago they were pariahs in Chicago and nationwide, given the real estate crisis. But for Cole Taylor it was a growing economic activity.

There were 30,000 homes built last year in Chicago for the firsttime homebuyers. Cole Taylor captured 10% of that market, because it looked at individuals in this business with good track records and good credit who were abandoned by the larger banks.

"We're in a great market for the kind of banking we do owner-operated and closely held businesses. There are over 100,000 such businesses in the Chicagoland market, the best in the country. The typical customer here is profitable and loyal.

Loyal ... but not necessarily after their banks get taken over. "Companies we've known for many years as members of this tight community move to us because of the turnover taking place in their previous banks," Mr. Taylor said. "We always stood as an independent bank for the middle market. We like our positioning and intend to continue it."

Cole Taylor did not rest on its laurels. After improving earnings, the company decided to diversify. Like other successful super community banks, it was looking for a specialty business to augment its core earnings.

It diversified beyond commercial banking in a business that would leverage its board.

Harold Silverman, a board member who started Mercury Finance, helped Cole Taylor start its own finance company. The cornpan3 also hired Tom Barlow, a 25-3ear veteran with ITT Consumer Finance, to build Reliance Acceptance.

Reliance buys used-car paper from new car dealers. The target car-buyiug customer has a blemished credit record, says Mr. Taylor - "they may not have paid a department store or their medical bills." But the risk in used-car finance is lower than in new car finance, Be notes, since deprereciation is more gradual."

Reliance competes on the basis of service to the dealer. It responds within an hour, so the traderwriting can be done while the customer is still on the lot, "We help the dealers sell more cars, so pricing becomes less relevant," Mr. Taylor says. "If he can go from selling 5 to 10 cars a week, he's happier with us."

Reliance's performance has exceeded expectations. With auto leasing growin to the used-car business is flourishing. The usedcar marketplace is growing and has reached $100 billion last year.

While the leasing and the used car business is flourishing, not many people understand how to handle these kinds of credits.

Unlike many super community banks, Cole Taylor has consolidated its banks into one institution. How do you reconcile having a branch network as opposed to individual banks with the super community banking concept? I asked Mr. Taylor. "Our bank's banking has more focus on individual neighborhoods than others," Mr. Taylor says "We had six banks with commercial lenders that did not get involved much in retail. We restructured our company so each office is headed by people whose primary purpose is comunity banking.

"What we do makes us special. Each office has a local advisory board chaired by a member of the bank's board. Our branch managers are people from the community around the office. They involve key community groups and incorporate their input into thek decision-making. Our goal is to make the branch maager a public figure in the trading area around their office." Cole Taylor went public in Mach and intends to use the capital to acquire local community bas with compatible cultures in the Chicagolad maket and beyond.

"We are looking to maintain the community focus and the customer retention ofienmtiony Mr. hylor says. "Our acquisitions structure will be a function of customer preferences.

"We are not committed to fold every acquisition into our branch banks. Whatever is best for the custoemr is what we will do."

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