Magazine article American Banker

Texas Bank Takes a Chance on Higher-Risk Funds

Magazine article American Banker

Texas Bank Takes a Chance on Higher-Risk Funds

Article excerpt

The pioneer spirit still rules at First National Bank of Bryan, Tex.

The $170 million-asset bank, which is still run by descendants of the Lone Star State settlers who founded it in 1862, is blazing trails in investment product sales.

While most community banks stick to gathering deposits and making loans, First National has branched into sales of mutual funds and annuities.

Now, the bank is preparing to expand its slate of conservative offerings to include "something with a little more risk," said Timothy Bryan, vice chairman and chief operating officer. The additions are expected by yearend.

Mr. Bryan said a wider range of investment options is needed because customers are demanding higher yields than most bond and income funds can provide.

The array of equity funds, which have been strong sellers for the bank, will be expanded to include more aggressive portfolios and possibly even some international stock funds, said Foster Ullmann, the bank's head investment counselor.

The strategy does have its downside, said Richard Ayotte, president of American Brokerage Consultants, Tampa, Fla.

The bank "could be attracting more customers by offering products with a higher yield, but it could lose some, too, because of the risk involved," Mr. Ayotte said.

But depositors' appetite for higher-yielding - and thus riskier - investments is just what prompted First National to begin offering mutual funds and annuities two years ago.

"We saw a lot of folks walking out the door of the bank and going down the street to the local brokerage," said Mr. …

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