Nebraska bank digs deeper into tri-cities market

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

Five Points Bank, Grand Island, Neb., has officially opened two offices in Kearney, Neb. Additionally, its sister bank of the same name - a separately chartered institution in Hastings - has filed for membership in the Federal Reserve.

The bank moved into Kearney a year ago and has since grown business there to $39 million. The two new branches, opened in May, replaced one temporary facility.

The Hastings bank was created as a de novo two years ago and has since grown to $88 million. It had been a separately chartered S&L owned by the bank. It remains separate, but has been re-chartered as a bank, hence the application for Fed membership.

"We've done exceptionally well in both Kearney and Hastings," said Vice President Ed O'Boyle. "We're pretty proud of how much we've managed to grow the bank."

O'Boyle said the bank leverages the close proximity of three cities: Hastings, Kearney and Grand Island. All are within 45 miles of each other. Having branches in these locations has made the bank's brand widely recognizable. The Grand Island charter, coupled with its Hastings charter, gives the company a combined $457 million in assets, second in the tricities area only to Wells Fargo, said O'Boyle.

"Between the three cities, the company has grown about $340 million in 14 years, which is really outstanding," he said.

The bank focuses on two distinct markets - businesses and senior citizens. "We've worked the heck out of those two groups," said O'Boyle.

Five Points' focus on seniors, a market decidedly different from commercial banking, started with a seniors club in 1978 and developed slowly over time as the number of seniors in central Nebraska increased.

"Our whole area is older than it used to be," said O'Boyle. "And the history of those accounts in our bank has been a very profitable one. In fact, they are our core deposits and we look at them that way. We treat a senior account the way most banks treat a money market account."

The bank offers free checking to seniors and pays interest on a tiered rate. It then leverages this relationship to endear customers to the bank and cross-sell other products.

"One of the neat things we do is hold a senior citizen Christmas dinner," said O'Boyle. "We served 2,200 people turkey dinner this year - all account holders. These little things keep them tied to the bank and really make the difference."

Missouri bank's new drive-up takes pressure off main bank

Belgrade State Bank, Belgrade, Mo., is building a drive-up branch in Potosi, Mo. The bank's existing full-service branch could no longer handle the volume of drive-up traffic - and its downtown Potosi location left no room for expansion.

"Our main office was under a lot of pressure," said President Don Turner. "The volumes at times are overwhelming."

In Potosi, Belgrade State Bank is the "dominant financial institution," said Turner. The bank has been in the town since 1986. Its hometown approach, coupled with some good timing, helped the bank gain a strong foothold in the community.

"There was a large bank there, that has now become US Bank, but when we moved in it was Mercantile," said Turner. "They were in some sort of self-destruct mode at the time and we were gaining accounts at a considerable rate and becoming known as the hometown guys."

The $130 million bank has eight branches in three neighboring counties, although it will soon close its most outlying location, a supermarket branch in the small mining town of Viburnum. Turner said the bank wants to focus purely on its branches surrounding Farmington, the area's trade center.

South Dakota bank sells insurance wing to holding company

Ipswich, S.D.-based holding company, Yellowstone Trail Bancorp, has purchased the insurance arm of its bank, Ipswich State Bank, and reopened the company as a de novo subsidiary, YTB Insurance, Inc.

Tom Holdhusen, president of both the bank and the holding company, said operating the insurance wing from the holding company level relieves the bank of some complicated regulatory requirements. Holdhusen said the change is small, yet effective: The Federal Reserve becomes the insurance arm's primary federal regulator in place of the FDIC. The South Dakota Division of Insurance stays on as the state regulator.

"It wasn't a matter of disliking our regulator or being unhappy," said Holdhusen. "We just saw a few things that would work more smoothly if the insurance business was owned by YTB. We feel the insurance company is an important part of our business. It isn't the most significant, but we wouldn't keep doing it if it didn't have some merit."

Yellowstone Trail Bancorp has combined total assets of $35 million. Ipswich, a town of just under 1,000 people, is largely agrarian. Holdhusen said the bank's farm customers also use YTB Insurance.

"Ag lending is the biggest part of what we do," said Holdhusen. "The insurance company is full service, so obviously some of our farm customers use it and it's important to them."