Forty Texas community banks have started selling mutual funds and annuities under a program developed by the Independent Bankers Association of Texas.
The program, which was launched last month, enables community banks to start investment product sales in as little as 35 days, according to Christopher L. Williston, president and chief executive of the Austin-based trade group.
Average Assets: $45 Million
Under the arrangement, MMAR Group, a Houston-based broker-dealer, will tailor sales programs for members of the Texas bank group. The firm will provide training and will help banks choose which investment products to offer to customers.
The Texas association has 810 members, with assets ranging from $ 1 0 million to $1.3 billion. The average institution has $45 million in assets and 19 employees, according to Mr. Williston.
Dubbed Banker's Choice, the program had been on the drawing boards for more than two years.
The 40 banks that joined the program at its launch recently completed a training program, Mr. Williston said in a telephone interview.
"Most of them are brand new to the business," he said. "A couple have been selling annuities, but none has been doing the full scope of services that this program offers."
The banks are taking very different approaches, Mr. Williston added. Some are getting their own employees licensed; others are bringing in brokers from MMAR. Some are setting up full-scale investment centers, while others will have a single investment desk.
Mr. Williston said bankers asked for the program because they were feeling competitive pressure from big banks that offer mutual funds - and, increasingly, from brokerage firms.
"Every one of these banks has an Edward D. Jones office down the street," Mr. Williston said. "They're just tired of seeing that money walk out the door."
"Many banks felt it was time to step up and be a serious player in the investments business," Mr. Williston said.
"The only way to get the same pricing as the big banks was through this cooperative approach," he added.
The association selected the MMAR Group as its partner because the firm specializes in dealing with institutional customers, Mr. Williston said.
Because the MMAR Group doesn't cater to retail customers, the banks that use the program won't have to worry about risking their customer relationships by sharing client lists with the firm, he said.