Telebanc Financial Corp., the thrift that treats the entire country as its core deposit area, is pursuing an acquisition strategy uniquely tailored to its unusual approach to banking.
Taking advantage of the upheaval in retail banking, Telebanc is buying up telephone-generated deposits out of branch and deposit dispositions.
"What's a noncore deposit to someone else is a core deposit to us," said chief executive Mitchell Caplan.
The Arlington, Va., company, owner of Metropolitan Bank for Savings, conducts almost all its business by phone. The thrift has collected more than $300 million in deposits from around the country, all originated and serviced without benefit of a single branch. Metropolitan's only office is a warehouse-like space filled with phone operators in a building near Washington, D.C.
Offering above-market interest rates, Metropolitan offers insured deposits and convenience to retail customers looking to park their savings in a relatively safe investment. It invests the deposits in mortgage-backed securities.
According to a recent Securities and Exchange Commission filing, Telebanc recently agreed to buy $60 million in deposits from First Commonwealth Financial Corp., an Alexandria, Va., thrift, in its first wholesale acquisition of deposits.
According to Mr. Caplan, the First Commonwealth deposit acquisition is a test to see if Telebanc, $313 million in assets, can successfully buy telephone-generated deposits from other institutions and hold onto them.
Because telephone-generated deposits are typically noncore deposits, they often don't fit into other banks' and thrifts' business plan. Therefore, Mr. Caplan said, they often sell for lower premiums than core deposits.
"Our view is that we can come in and buy a deposit that may not be deemed to be a core deposit for a institution that's looking for only local customers," he said. "We buy them, then sell the customer on us."
Mr. Caplan said that with the many in-market mergers going on in banking right now, resulting in the sale of branches and deposits, the market for buying such deposits could be rich.
"Many banks and thrifts will generate telephone deposits as a short-term funding mechanism," he said. "When they don't need them any more, that's where we can come in."
He said that if the First Commonwealth purchase is successful, "and so far it is," Telebanc could go prowling nationally for telephone deposits.