Wisconsin bank enthusiastic about Universal Bank certification

Northwestern Financial Review, Mar 1-Mar 14, 2004 by Dullum, Justin

Banks have been applying for Wisconsin's new Universal Bank certification since November. The certification, which became available Feb. 1, already has five takers. One is Acuity Bank, SSB, Tomah. The bank expects to greatly benefit from the certification's new powers. Acuity, the Sheboygan-based insurance company, owns the $158 million state chartered savings and loan association.

"For us to expand our powers to a commercial bank, we needed to become a financial holding company at the approval of the Federal Reserve," said President Gary Riley. "And our holding company here would have become subject to regulation by the Fed. The new law allows us to continue with our existing charter but with the enhancement of full banking powers."

Increased branching abilities will be the most important new power Acuity Bank will acquire, said Riley. "We were limited to a 100-mile radius. It was a problem before, especially since our home office is in Sheboygan. We couldn't even put a branch in our headquarters to service our employees," said Riley, who added that the bank will likely explore a move into Sheboygan.

Riley said the bank benefits all around from the certification and plans to put its new lending powers into action soon. "We had been under an asset and capital limitation for commercial lending that was becoming a problem as we grew," he said.

"We also may exercise the power of any federally chartered savings bank or national bank without changing our charter," said Riley. "I can't speak for other banks, but for our particular situation, it's wonderful."

Another of the banks getting a jump on certification, Peoples Bank of Wisconsin, Hayward, wanted the certification for less pressing reasons. Vice President Jerry Kurtz said the bank has no specific near-term plans to employ the new powers, but management felt strongly about being in the position to use the new powers should they become needed.

"The more liberal insurance and real estate powers are certainly appealing," said Kurtz.

American Federal moves within Grand Forks

American Federal Bank, Fargo, N.D., has received approval to move an existing branch within Grand Forks, N.D. The bank seeks to accommodate future growth.

The bank's current Grand Forks branch, open since 1994, doesn't have room for a drive-through and was otherwise bursting at the seams of its increasingly cramped 1,600-sqaure-foot location, which had initially been opened as a loan production office.

"The drive-through is something that is absolutely necessary for a bank to have," said Grand Forks-area President Tim Fairchild.

To rectify the situation, the bank bought a 4,200-square-foot building on what Fairchild calls "bankers' row," otherwise known as Columbia Road, where six other banks currently share close quarters.

"There are a lot of banks in the area but we feel it's the right place to be," said Fairchild. American Federal will, however, be the only bank on the east side of the street.

The road divides a major area of commerce from a large residential area, said Fairchild. "A lot of banks find this situation attractive, but we think we'll do very well here considering we'll have the opportunity to offer drive-through service."

The new branch, formerly Churchill's Shoe World, will undergo major remodeling and be open in October. Since 1889, the $250 million American Federal was headquartered in East Grand Forks, Minn. Following the devastating spring flood of 1997, which destroyed its main office, the bank relocated its headquarters to Fargo.

Harris Bank files merger

Harris Bank, Chicago, has filed to acquire New Lenox State Bank, New Lenox, Ill.

Founded in 1927, NLSB has eight full-service branches. NLSB will significantly expand Harris' distribution network in Illinois' fast growing southwest suburban Will County. NLSB is privately held with $998 million in assets and $899 million in deposits. The purchase price is $228.5 million.

"NLSB is a fixture in the communities it serves and it has maintained market share and growth in a competitive environment despite many new entrants," said Frank Techar, president of Harris Bank. "NLSB significantly expands our presence in markets we know well, and solidifies Harris' No. 1 market share position in Will County."

Techar told analysts that one branch will likely close as a result of the sale. Which branch has not been determined.

Everett J. Hauck, president of New Lenox Holding Company, NLSB's parent firm, said the two banks are a good fit.

"Harris has a loyal client base throughout Chicagoland and our shared vision is a strong focus on community banking, local knowledge and customer service."

The deal is expected to close this summer, subject to regulatory approval. It will increase the $30 billion Harris Bank's Chicagoland network to 163 locations. Harris is a member of BMO Financial Group, a diversified financial services institution headquartered in Toronto, Canada. NLSB represents the 13th acquisition by BMO Financial Group in the U.S. since 1999.