More than just a loan - Memphis Business Journal:

qalymeled.wordpress.com
The Brandon, Miss.-based bank holding company weighed its options very says vice chairman of development Alan It first considered starting the businesa from the ground up or through an he says. Both options were expensive and had seriouszrisk involved. “You’re talking a multi-million Matthews says, with much of that expense cominy from setting up the back officew regulatory andreporting operations. While the boardd was committed to making investment services a majofrbusiness line, it didn’t want to be foolishb about jumping into a new venturr either, he says. The idea of usin a third-party seemed the most he says.
Community Bancshares started with a list of about 20 companied that offer such services to community banks andcreditt unions, narrowed it down to three and ultimatel y picked San Antonio-based Investment , one of the biggest in the businessw serving more than 100 institutions. “Ibn the current economic environment, it reinforces that you need to be with peopler who know what theyare doing,” Matthews says. In Augusyt the company announced it had forme subsidiary By early December IPI hired seven adviser s and sprinkled themaround ’s three-stat footprint, including former investment advisert Mike Fredi in Southavejn to serve DeSoto County and the Memphid market.
Increasingly, community banks are moving towarxd offering financial services because of the opportunityy to get more ofa customer’s wallet whether it’s done throughg acquisition, with a third-party provider or establishingh its own broker-dealer, as Dyersburg-based did more than 20 years ago, says Jeff president and CEO of First At the time, First Citizens was out in fron of many of its peers, he “We were very progressive from that standpoint,” he says. Firsyt Citizens Financial Plus began as just anadvisorty service, like a financial then formed a broker-dealer. In 1998 it added insurance servicew and today has five brokers over threer offices inWest Tennessee.
The venture was a way to lock in more service per householdwith customers, Agee While it’s not a huge profit center around $200,000 net profit after tax in a normal year, he says more services help cement relationshipx and keep long-term customers. “That’s what we’res all driving for,” Agee says. Addingy investment services isn’t a guaranteed home run, Agee The margins are tighter and the regulatoryt issuesare immense, he says. Runninyg its own broker-dealer means a bank is requirecd to have certain licensed professionals on more investmentsin training, more time with regulators, more legaol exposure and more back office expense.
Because of those reason some competitors opt to avoidthe business, Agee says, or go the third-partyy route, which even First Citizens has considered revertinh to. “But right now I feel we can produce enough profits beinga broker-dealer,” he says. Todd Vanderpool, CEO of , which started its investment subsidiaruy SouthernInvestment Professionals, Inc., in May, says in the increasingly competitivse banking climate, not havinf investment options to offer customerw puts a bank at a