Bankers' bank
Encyclopedia
A bankers' bank
is a financial institution that provides financial services to community banks in the United States of America. Bankers' banks are owned by investor banks and may provide services only to community banks.
By leveraging positive economies of scale
, bankers' banks are able to provide many services to community banks that typically would be economically available only to large national or multinational banks. The advantage here is that community banks which use these services can in turn offer them to their customers, allowing these smaller independent banks to effectively compete with larger banks.
The first bankers' bank was formed in Minnesota
in 1975. Currently there are 22 bankers' banks across the US serving more than 6,000 banks in 48 states. The largest bankers' bank is at present TIB-The Independent BankersBank
, located in Irving, TX, and serving over 1,400 banks across 46 states - plus Guam and Bermuda.
The most successful Banker's Bank is the State Bank of North Dakota. Founded in 1919, this bank partners with other banks around the state of North Dakota and has helped the state remain solvent in hard economic times. In 1997, when the Red River flooded and destroyed Grand Forks and East Grand Forks, the State Bank of North Dakota quickly funneled money so that people could save others and repair the damages after the flood died down. Grand Forks quickly recovered thanks, in part, to the efforts of the State Bank of North Dakota, East Grand Forks, located in Minnesota, did not recover as well or as quickly, due to a lack of funds that the State Bank of North Dakota provided its counterpart.
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
is a financial institution that provides financial services to community banks in the United States of America. Bankers' banks are owned by investor banks and may provide services only to community banks.
By leveraging positive economies of scale
Economies of scale
Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...
, bankers' banks are able to provide many services to community banks that typically would be economically available only to large national or multinational banks. The advantage here is that community banks which use these services can in turn offer them to their customers, allowing these smaller independent banks to effectively compete with larger banks.
The first bankers' bank was formed in Minnesota
Minnesota
Minnesota is a U.S. state located in the Midwestern United States. The twelfth largest state of the U.S., it is the twenty-first most populous, with 5.3 million residents. Minnesota was carved out of the eastern half of the Minnesota Territory and admitted to the Union as the thirty-second state...
in 1975. Currently there are 22 bankers' banks across the US serving more than 6,000 banks in 48 states. The largest bankers' bank is at present TIB-The Independent BankersBank
TIB-The Independent BankersBank
TIB-The Independent BankersBank is the United States’s largest bankers’ bank, with over $20 billion in total assets under management and providing correspondent banking products and services to over 1,900 community banks in 47 states—plus Guam and Bermuda...
, located in Irving, TX, and serving over 1,400 banks across 46 states - plus Guam and Bermuda.
The most successful Banker's Bank is the State Bank of North Dakota. Founded in 1919, this bank partners with other banks around the state of North Dakota and has helped the state remain solvent in hard economic times. In 1997, when the Red River flooded and destroyed Grand Forks and East Grand Forks, the State Bank of North Dakota quickly funneled money so that people could save others and repair the damages after the flood died down. Grand Forks quickly recovered thanks, in part, to the efforts of the State Bank of North Dakota, East Grand Forks, located in Minnesota, did not recover as well or as quickly, due to a lack of funds that the State Bank of North Dakota provided its counterpart.