Iowa banks kick off 2007 with merger

Northwestern Financial Review, Feb 1-Feb 14, 2007 by Dullum, Justin

Two Iowa banks rang in the New Year by joining forces and changing names. State Bank of Waverly and Iowa Savings Bank, Dike, were merged late in 2006 by their shared holding company, Cedar Investment Co., and opened as State Bank & Trust Co., (in January 2. The combined $141 million bank has a state charter in Waverly.

The move benefits both banks. State Bank of Waverly's customers will be able to tap into the Iowa Savings' well-established insurance offerings, and Iowa Savings gains a more high tech back end that includes robust internet banking as well as investment and trust services.

"Since we were owned by the same holding company, the back end part isn't a dramatic change, but being fully merged has significance," said former Iowa Saving President Mike Phillips, who now serves as market president in Dike. There's no question that the cost of offering services as one bank is lowered, so everyone benefits. Consumers get better services at less overhead cost, so nobody loses anything. For our market, our lending limit almost doubles. The two banks had a lot of commonality going in, but now we're fully on the same page and can do better business." State Bank & Trust has six locations and seven ATMs. Three brandies are in Waverly, with individual branches in Janesville, Dike and New Hartford. The bank's wch site - www.shtcompany.com - launched on Jan. 2, focuses on servicing customer accounts.

"The web site is a big thing for our market," said Phillips. "As Iowa Savings Bank, we hadn't dove into online banking fully, hut the merger made that make a lot more sense. Making a change like this had a few little bumps along the way, but the site is now working perfectly." State Bank's marketing director, Hoilie Bean, said the bank's customers have been receptive to the change.

"We started getting the word out about six months ago," Bean said. "We put out a media release. Then we did some advertising. Then we did another release. We sort of got it out there early so nobody was surprised. We put a lot of information out in a newsletter. Now that the signage has actually changed. I'm not aware of there being any problems with customers. I think there's a general feeling everyone is happy about the improvements."

Although the merger streamlines the back end fully, the previously separate banks' shared core data processing eliminated the need to generate new account and FINs for existing customers. Not having to implement changes in the things consumers hold private helped foster a positive response for the overall change. Bean said.

The relationship between the two merged banks dates back to 1993 when State Bank of Waverly's holding company, Cedar Investment, purchased Iowa Savings Bank's parent company. Dike Bancshares. When the purchase was made, the two banks combined for $121 million in assets, according to the FDIC.

Indiana de novo eyes Indy

Tower Financial Corp.. Fort Wayne, Ind., has formed Tower Bank of Central Indiana, a de novo community bank headquartered in Carmel, 15 miles north of Indianapolis. The bank's initial capitalization is expected to be within a range of $13.5 million to $15 million. Half of which will be provided by outside investors and half put up by Tower Financial, said Don Schenkel, president of the holding company that also owns Tower Bank & Trust, a $642 million hank with six locations in Indiana.

Tower Bank & Trust currently runs a loan production office in the Indianapolis market. This office will become a branch of the de novo when the new bank opens for business, as expected, in the first quarter of 2007. Its separate headquarters, currently under construction, will open concurrently.

"Banking, as we see it, is a local business," said Schenkel. "In Fort Wayne, our model has made us successful. We're going to leverage the success and strength of the Fort Wayne bank and bring it into Indianapolis, which has some pockets of rapid growth."

William H. Olds, Jr., a resident of Indianapolis and a 34-year banking veteran, will serve as president of the new bank. The bank's home turf - Hamilton County - is predicted to grow 30 percent in population by 2011; its current median annual household income is more than $88,000.

"We are planning a strong future for this new community bank," Olds said.

Michigan bank passes $1 billion

Dearborn Bancorp, Inc., Mich., the holding company for Community Bank of Dearborn, has completed an acquisition of Fidelity Financial Corporation, Birmingham. Mich. The deal nudges Dearborn Bancorp past the $1 billion asset mark.

"We are thinking of this acquisition as a milestone," said Dearborn Chairman John Demmer. "There's the part of it that doesn't mean anything - that it's just a number and doesn't affect our day to day. But you look at the number as a sort of threshold. It just is very symbolic. We're happy with this merger."

Fidelity's CEO, John Lindsey, becomes Dearborn's Oakland regional president, and the seven Fidelity offices will continue to operate under thi' Fidelity name. Community Bank of Dearborn operates 19 offices in Michigan.