Vanessa Mambrino, Consultant & Nick Robin, Business Analyst
Capital Performance Group LLC, Washington, DC, a firm providing advisory, planning, analytic, and project management support to the financial services industry. 

The story behind the success of Bank of Montgomery, La. (#4 among large subchapter-S corporations) begins like many others.  The bank has been open since 1903 and only began to expand outside of its original market of Grant Parish, La., in the mid-1990s.  It continues to serve central Louisiana with four branches across Grant and Natchitoches Parishes.  The same family still owns the bank.  Its loan and deposit products and rates have not changed significantly over the years.

This continuity has not made bank management complacent.  “About five to seven years ago, we began working hard to generate more fee income, so that we would not be so dependent on interest income,” says Ken Hale, bank president.  The bank became a preferred Fannie Mae underwriter and increased its secondary market activity.  It originates and sells both USDA and SBA loans.  Finally, Bank of Montgomery also built an insurance agency and investment advisory arm “from nothing” via “a lot of trial and error.”  Increases in income from both the sales of loans and insurance commissions helped to drive an improvement in noninterest income from $2.8 million in 2010 to $4.3 million in 2011.

Bank of Montgomery also experienced an increase in net interest income in 2011, led by upticks in interest income from CRE and C&I loans (and assisted by decreased funding costs).  CRE loans represented a larger part of the portfolio in 2011 relative to previous years.  “Though we operate mostly in rural markets, we maintain good relationships with local professionals and try to specialize in owner-occupied commercial real estate,” explains Hale.

In 2012, Bank of Montgomery has continued to expand, adding a new location and keeping an eye out for any sensible opportunities to add to its insurance or brokerage businesses that might come along. “Our goal is to always achieve an ROAA of at least 2.00% and an ROAE of at least 20.00%,” says Hale.  “We believe that Bank of Montgomery will have a good year in 2012 and will hit these goals.”

 

 

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[This article was posted on June 22, 2012, on the website of ABA Banking Journal, www.ababj.com.]    

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