Laboratory for Excellence: Los Alamos National Bank

Article excerpt

An Interview with William C. Enloe

Los Alamos, New Mexico, is a small community of 18,000 individuals. The majority of the small private businesses support the Los Alamos National Laboratory. Los Alamos National Bank was established in 1963 to meet the needs of a community that had grown around the Laboratory. The bank was recently catapulted into the spotlight by two major events--one a tragedy and one a triumph. The bank shined during both. Chairman & CEO William C. Enloe talked with David Arata, RMA's community bank specialist, about the bank, these events, and the future direction of community banking.

DA: Tell us about Los Alamos National Bank and the market you serve.

WCE: Until 1963, Los Alamos National Laboratory and the town that had grown around it was owned by the federal government. The one bank serving the community did so on a franchise basis; although it took deposits and offered checking accounts, it did not lend money within the community. Local citizens, primarily Lab employees, wanted a bank that would provide full service to Los Alamos, and so Los Alamos National Bank was founded the same year that the town was privatized. We remained solely in Los Alamos until 1999, when we opened an office in Santa Fe. We now are at $680 million in assets and have three branches serving this market, including a branch in White Rock, which is actually a part of Los Alamos. If a bank were to create a profile of its ideal customer, the typical Los Alamos National Bank customer would be the result. Our customers are well educated, well paid, have stable jobs, are conservative, and save a good deal of their money.

Although we now have numerous competitors, we do about 82% of the mortgage lending in Los Alamos, primarily through Fannie Mae. We also maintain a portfolio of second mortgages, and we sometimes originate and keep first mortgages that do not quality for Fannie Mae, such as a number of mortgages for government housing.

With a commercial portfolio of $66 million, we're also the primary commercial bank for Los Alamos. We do a good deal of land development and commercial real estate and office building financing. And we do most of the retail and technology-based commercial lending here as well as in Santa Fe. We've gained a good reputation with technology-based companies as well as with professionals (doctors, lawyers, dentists)--they know we understand their industry and can work with them. So it s not coincidental that a strategic decision of ours was to go after those two industries. We've even gone out of our market slightly in the technology sector, primarily to Albuquerque, because the University of New Mexico and Sandia National Laboratory are there. Many Albuquerque firms match the profile of the kinds of companies that we see here.

I don't want to imply that we do venture capital, because we don't. Thc companies we work with have established products and customers, as opposed to new companies that are looking for venture capital. We do work with a number of venture capital companies, and sometimes we will do joint financing by lending against receivables, contracts payable, or other partner assets. It's been good business, and any losses in that area have been minimal.

We have chosen not to enter the securities business, although Smith Barney operates brokerage services out of our Los Alamos and Santa Fe branches. We do offer full trust services. We have the full spectrum of loan products, including overdraft protection and credit cards. With 26 ATMs in our three service areas, we offer greater convenience than our competition, and our leading-edge, Internet-based home banking system is offered at no charge to our customers.

DA: Tell us more about your online banking.

WCE: Right now, about 20% of our direct deposit account customers are banking online. While you might expect most of our Internet customers, to be technology-savvy Lab employees, we have learned from marketing surveys that there is not a lot of difference between the number of Lab and non-Lab customers doing online banking. …