Magazine article American Banker

Georgia Bank Boosted Deposits by Offering Mutual Funds

Magazine article American Banker

Georgia Bank Boosted Deposits by Offering Mutual Funds

Article excerpt

In a recent column, community bankers were asked to tell how they solve the problem of selling the mutual funds their c u s t o m e r s want without robbing their own deposit bases.

A superb letter from Charles R. Lusk, president and CEO of Rossville Bank in Rossville, Ga.. tells of his bank's experience. It has much merit for other independent bankers facing this problem.

Mr. Lusk writes:

"Approximately eight years ago, we opened a "financial center" in our bank lobby. The center is staffed by an individual who maintains a Series 7 investment license and works very closely with us.

'Like a Shopping Mall Lease'

"This individual is not a bank employee. We lease space to him, and the lease fee is based upon a flat fee plus a percentage of the profits he earns in the financial center. It is set up very much like a shopping mall lease.

"Following several years' experience, we feel that this is the best avenue for the sale of nonbank financial instruments. Not only are mutual funds sold through the center, we also sell annuities, 401(k) plans, self-directed IRAs, Keoghs, etc. As a matter of fact, any financial instrument you wish to purchase can be handled through our financial center.

"In addition to selling various financial instruments, we also do a significant amount of financial planning.

"When we first opened the center, a lot of my banker friends thought I had lost my mind. We gave this individual complete access to our CD maturity-list. They thought for sure I had let the fox in the henhouse.

Strategy Was Defensive

"Our original intent was to conduct this as a defensive move more than as an offensive move. At that time, we were losing some CD funds to the brokerage houses and felt that anything we could do to keep our customers in our lobby was the right thing. Meanwhile, if we made some money off of it, that was just the icing on the cake. …

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