Magazine article American Banker

Firstbank of Ill. Buys Broker to Sell Funds

Magazine article American Banker

Firstbank of Ill. Buys Broker to Sell Funds

Article excerpt

Firstbank of Illinois Co. took its strategy on nonbank financial products to a new level last week with its purchase of an existing full-service brokerage firm, a rarity for a community bank.

Firstbank, a $1.5 billion-asset holding company in Springfield, Ill., announced that it had completed the acquisition of Rowe, Henry & Deal Inc., an independent registered securities dealer in Jacksonville, Ill.

To expand its investment services, the company will establish "investment centers" as departments in each of its subsidiary banks staffed by registered representatives who will be bank employees. "Running a community bank and having investment centers that are part of that bank is different from what you see," said Larry Burton, executive vice president in charge of Firstbank's financial services division. "It's something we think our bank customers will respond very well to."

Sought 'Complete Ownership'

Firstbank, which set up a bond department at its First National Bank of Springfield in the early 1980s that slowly evolved into discount brokerage, decided to expand to full-service brokerage services.

Management explored three options, Mr. Burton said: hiring a third party, doing it themselves, or acquiring a brokerage firm.

A third party was ruled out because, "We wanted complete ownership of accounts," he said. "That is a very gray area with a third party."

Having done business with Rowe Henry, Firstbank management decided that for roughly the cost of establishing their own business, they also could get the existing company's expertise and experience. …

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