Striking the Mother Lode

By Newkirk, Kristine M. | Independent Banker, May 1998 | Go to article overview
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Striking the Mother Lode


Newkirk, Kristine M., Independent Banker


NEVADA START-UP BANK CATAPULTS TO PROFITABILITY BY MINING A WELL-ROUNDED FAMILY OF SERVICE PARTNERSHIPS

"Gold rush was as applicable to California in the 1850s as it is to Nevada in the 1990s. But more than just gold nuggets are buoying up sales at the 1993 de novo Great Basin Bank of Nevada

In these five short years, savvy operational and marketing alliances along with a golden economy have made Great Basin Bank a landmark in the mining boom town of Elko, Nev. And IBAA has helped the bank pan for "gold" in these customer-rich environs every step of the way.

Since Great Basin Bank opened on July 29, 1993, President Terry Sullivan has concentrated on building a full-service independent community bank-a bank, he says, where people from 200 miles around can fulfill their financial needs. He has expanded the bank's products and services rapidly, relying heavily on the services of the IBAA Community Banking Network to give each additional product or service a jump start to maturity.

For real estate lending, ATM cards, debit cards, credit cards and investment services, Sullivan has turned to IBAA. Together these products catapulted the bank into the black within two years and contributed to a 1.2 percent return on assets during 1997.

"IBAA helps us round out our services and stay competitive with large financial institutions in a way that provides the greatest benefits to our customers," Sullivan says.

Already approaching $50 million in assets, Great Basin Bank should continue to experience double digit growth as forecasts call for Nevada-with one of the country's top three growing economies-to double in population within 10 years, Sullivan says.

Building a Critical Mass

From the start, Great Basin Bank relied on IBAA Securities Corp. to establish a solid investment portfolio base that would leverage the young bank's assets to the greatest advantage. IBAA Securities provides portfolio investment advice and training that is sensitive to the special needs and concerns of community banks.

"It's helped us manage our interest-rate risk," Sullivan states. "They've done a good job of locating investment securities for us. We have a strong municipal bond portfolio with them."

Sullivan also tested the mettle of the IBAA Community Banking Network by sampling the services of IBAA Mortgage, soon after opening its doors in 1993. IBAA Mortgage helps banks originate a variety of mortgage products for the secondary market, including manufactured housing.

Vice President Janet Silva recalls how Great Basin Bank management searched for a mortgage servicing partner to avoid having to sell directly into the secondary market, thereby limiting the bank's risk exposure while the startup built a core base of customers.

IBAA Mortgage was chosen over other service providers, Silva says, for the quality and range of its mortgage products. Under the IBAA Mortgage contract, Great Basin originates, processes and closes the loans. Servicing partners PHH Mortgage Services and the Associates Housing Finance Services fund and service loans on the back end.

Silva says the lending programs have grown steadily in volume and consistently brought in fee income with a minimum of exposure to the bank. For 1997, the bank closed 181 mortgage and manufactured home loans totaling $16.8 million in volume. This performance earned the bank its fourth consecutive Award of Excellence in the mortgage program and its first in manufactured housingthe only bank ever to be honored for both programs. Revenue from both brought Great Basin Bank more than $270,000 last year.

In addition to the significant revenue stream, Sullivan says, the programs helped the bank build an identity in a marketplace dominated by the majors-Norwest, Wells Fargo, Bank of America and U.S. Bancorp all have a presence in and around Elko. "Mortgage lending has given us the visibility we need to recruit customers who can then be cross-sold into other bank products," Sullivan explains.

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