Q and A
What is a Bankers' Bank?
A bankersí bank is an FDIC insured commercial banking institution that is owned and directed by community banks. It is a bank that does business only with banks and bankers. No retail banking services are offered. Thus, the name bankersí bank. A bankersí bank allows community banks participation in the design, delivery and cost of their correspondent services.
What is the history of Bankers' Banks?
In 1975, the Independent State Bank of Minnesota opened as the first de novo chartered bankersí bank. It is owned by banks and does business only with banks and bankers. Bankersí banks were subsequently chartered in Colorado, Texas, Wisconsin, Ohio, Pennsylvania, Florida, Louisiana, Oklahoma, Missouri, Illinois, Virginia, Georgia, Kansas, Kentucky, Arkansas, California, Connecticut, Mississippi, Nebraska and Alabama.
How are Bankers' Banks Different?
Unlike the correspondent banking department of a large money center bank, bankers' banks have no corporate purpose other than to serve community banks. They do not compete in the retail banking marketplace. They are owned by banks and directed by bankers. They provide a full range of correspondent services only to financial institutions. Bankersí banks function like large multi-bank holding companies with the ownership reversed.
What do Bankers' Banks do?
A bankers' bank provides all of the traditional correspondent banking services that are available at money center correspondent banks albeit in a more personal way and generally at a lower cost. Some of the services offered are: item clearing, federal funds (sales and purchases), loan participation/overline services, bank stock loans, investment services, currency/coin, safekeeping, credit card and merchant services, and several electronic services.
What can a Bankers' Bank do for me?
Any community bank can use the services and management assistance of a bankers' bank. If your bank elects to become a stockholder, you can provide direct input into the priorities and direction of our organization; achieve even better pricing based on your commitment of capital and balances, and hold an investment in an appreciating asset that works for you every day of the year. In other words, you can have a say in how your correspondent services are delivered. Whenever possible, a portion of your correspondent service fees is returned to you in the form of stock dividends.