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Oct 13
2010
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HAIL A NICHE: DOES YOUR BANK HAVE A SPECIALTY?Posted by Steve Cocheo in Pass the Aspirin The Blog   |
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The Headache: Finding business opportunities that the rest of the world isn't also chasing.
Our Question: Has your bank found niches—product, market segment, geography, or otherwise—that give it a leg up?
Come see what other bankers think, and add your own views
Nichemanship: Have you found a special opportunity for your bank?
The October 2010 ABA Banking Journal Community Banking column features a discussion of the nichemanship strategy for community banks. The column describes the challenges of persuading regulators to approve business plans that involve niches, and sketches out the broad outlines that will pass muster. The article focuses on three community banks that have found special niches to supplement mainstream earnings.
• California's Beach Business Bank, for instance, set up a division called "The Doctors Bank," which caters to the needs of medical professionals not only in its local markets, but nationwide, through tools such as remote deposit capture.
• Suburban New York's Madison National Bank saw an opportunity nearby, in New York City. Yellow cab driver-owners and fleets need to finance the "medallions" that allow cabs to pick up street hails. These special permits are expensive. Madison saw an opportunity by stressing service to the brokers who arrange these loans.
• And a troubled thrift being reorganized by new ownership and management believes "green" is a viable niche. Read about "GreenChoice Bank" and its plans in the Chicago area.
But first, tell us about niche opportunities your bank has found that other community banks can try in their local markets.
Let's hear your views and ideas below! (Editorial Note: Contributions to Pass the Aspirin may also appear in our print edition. While we will ask for your e-mail address, this is only as an aid to verifying identity and will not be used for any marketing or promotional purpose. The e-mail address will not be published.)
To suggest new topics for Pass the Aspirin both in print and in this blog, please e-mail scocheo@sbpub.com
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Carolyn Mroz, president and CEO, Bay-Vanguard Federal Savings Bank, Baltimore, Md.
said:
| We are very involved with financing mobile homes in mobile home parks. We have done this since 1988 with conservative underwriting and much success. We work with both dealers and brokers. They are handled like auto financing, with a reserve account to cover delinquencies. There are not many community banks doing this financing in our market, so we are able to develop relationships fairly easily with these dealers and brokers. It has worked well. | |
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Frank Campbell, president and CEO, Pilgrim Bank, Cohasset, Mass.
said:
| During the last few years, we have developed a non-owner-occupied lending niche. In particular, we have been funding rehab loans on 1-4 family properties in the city neighborhoods. Typically these properties are foreclosed or distressed sales. The buyer does extensive renovations using a construction-to- permanent loan product. Once completed, the properties are rented to low-to-moderate income tenants. | |
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Jeff Marsico
said:
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I have spoken and written about the benefits of being known for "something" other than being a general bank. I also understand regulator concern regarding niche banking. There is a middle road. I do not believe a bank can rely solely on its niche. For example, a business bank relies significantly on retail deposits for funding. Carolyn Mroz's bank most likely is diversified with plain vanilla 1-4 family loans and commercial real estate. Therefore, be "known" for something, do it better than the competition, but have some marbles in other products and lines of business as well. ~ Jeff www.jeff-for-banks.blogspot.com |
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