HILLARY RODHAM Clinton was not the only one in Arkansas to make money in cattle futures.

For the past eight years, First National Bank of Springdale -- in the state's northwest corner -- has been actively trading in cattle futures, mortgage-backed securities, equities, and treasuries for its own account. Gains from these investments have increased from $122,000 in 1991 to $1 million in 1992 to $1.3 million in 1993.

The bank decided to make a firm commitment to the trading business by installing a realtime financial, commodity, and new-information service from Knight-Ridder Financial Inc., New York.

It allows the 140-employee bank to get real-time news, financial, and commodity futures information. By having the live feeds, the bank is able to get the same information as traders and dealers to insure it is getting the best price for the securities is buying and selling, and plan it strategy.

Currently, the bank's investment portfolio is dominated by treasuries (50%) and mortgage-backed securities (about 15%), with the remainder in commodities, futures, and some short-term money market instruments for liquidity.

"We have been doing extremely well for the last few years," said Michael Beard, senior vice president.

Indeed, First National has been on the list of high-quality banks prepared by bank ratings firm Veribanc Inc., Wakefield, Mass., for several years.

"We very seldom run a loan to deposit ratio of above 50%, so it makes the management of the investment portfolio more critical to our performance than in an institution where the portfolio is managed to handle the loan side of the operation," said Mr. Beard.

The bank knew it needed a technological solution to achieve its performance goals.

"We needed something that would allow us to manage our portfolio," Mr. Beard, senior vice president. "After consulting a number of people in the industry we found the Knight-Ridder Money Center service.

"By using Money Center, we can see tick by tick pricing on the securities," he added. "If you are running a portfolio and you don't know where the markets are, you are at the mercy of the broker. Having a [service] like Money Center provides the necessary link that keeps the playing field level."

Before installing Money Center, the one-branch bank had to rely on information from traders and brokers in the market. It wanted a source of unbiased information.

And when customers from a failed thrift brought their deposits to the bank, its investment portfolio doubled in a mere six weeks to $150 million. The bank clearly needed a better way to get information for its investment operation.

Also, First National wanted to compete more readily with its bigger brethren.

The use of information services is the democratizing force that is notable, because now small operations can compete with the largest, said Marydee Ojala, an information consultant with Ojala & Associates in Park City, Utah.

"Information is currently available anywhere, any time through electronic systems," she said. "From a business standpoint, this has several ramifications. Now small, rural, and operations outside of the main money market area can be competitive with large institutions because now the companies have access to the same information that was previously available only if you had money and clout."

The Knight-Ridder on-line services allows the bank to see the real-time information and compare it to the information that the brokers are providing.

Technology is just one piece of the bank's success. First National still relies on internal judgment on time and price discretion. However, Mr. Beard said, there is no way the bank could approximate the performance of the portfolio without the service.

Currently, Mr. Beard is the only bank employee using the service. The information is pumped into the bank through a satellite feed to a 386-chip personal computer on his desk. It is literally at his fingertips.

For several years, First National has subscribed to the service, which allows it to see realtime securities prices from various markets around the world.

First National also uses the service in an interest rate program that tries to balance the bank's liabilities sensitivity with options on Eurodollar contracts. It does this because, like most banks, it is liability sensitive. By shorting the Euro-dollar futures market, it is able to justify the liability side of the balance sheet because the deposits reprice more quickly then the assets.

"We had a conference call in my office discussing strategies with a Merrill Lynch options strategist out of New York and were able to roll through the screens on all of the information" from the service, said Mr. Beard. "It would almost be impossible to have the type of strategy session we had without the system on my desk, because we were able to see the same information tick by tick."

And because he can see the real-time prices, he can choose not to work with any broker who quotes higher prices.

"If I call a broker and tell him I want him to offer me a couple million in five-year treasuries, he better offer them to me at the price on the screen or I will call someone else," he said. "Somebody else will be willing to sell it to me for what it is worth because they want the business and now I know the right mark."

Having the service has really changed the bank's relationship with brokers.

"It was a real wake-up call for the brokers," said Mr. Beard. "In the past they were calling on a little country bank that was flying by the seat of its pants and that all changed pretty dramatically when we installed the system."

The bank has been in situations where it put out a bid list for several million dollars in securities and the difference between the high and low bid from three primary dealers might be as much as $80,000.

"If you equate the difference in price to the cost of the system, you see the system pays for itself," Mr. Beard said. "With one deal like that, the systems pays for itself for seven or eight years." The service costs an average between $12,000 and $14,000 a year.

Although the bank now has a sophisticated system, it still knows its limitations in playing the market.

"In all my years there is one thing I have learned: Wall Street is always creating products, Mr. Beard said. "There are some products that are great to sell and great to buy." But, he added, other products -- such as mortgage--backed derivaties -- are good for selling, but not for buying.

"We shy away from the derivatives market because we don't feel the risk reward is very good," he said.

"We are not in it because we do understand how it works, and we know it is not for us," he said.

"We are a small bank surrounded by multibank holding companies, and in order to compete we need to be in the front seat of technology; by using this service we are in it."

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