News
Texas bank adds ATMs, deposits via Wells Fargo
September 17, 2003
AUSTIN, Texas - When American Bank of Texas NA opens its two Austin-area branches later this year, it will offer its customers free access to Wells Fargo ATMs and allow some of its customers to make deposits at any of the 43 Austin-area Wells Fargo branches.
Steven Smith, chairman of the holding company that owns American Bank of Texas NA and the bank's chief executive, told the Austin Business Journal that the deal will aid pre-approved American Bank of Texas customers who might live far away from the bank's new Austin locations.
"It just makes it more convenient for some of our customers who need to go to the bank every day or three times a week to make a deposit. If we have a customer in Round Rock, they can make a deposit there instead of coming to Rollingwood. That makes their life easier," Smith said.
American Bank of Texas, which has $150 million in local assets and $118 million in local deposits, has branches in Marble Falls and Horseshoe Bay and plans to build branches in Lakeway and Rollingwood, according to the Business Journal.
Through a spokeswoman, Michael Moses, vice president and relationship manager with Wells Fargo's correspondent banking business, declined to comment about its relationship with American Bank or any other financial institution. However, he said Wells Fargo does offer a third-party deposit service and access to its ATM network.
Wells Fargo has about 3,500 correspondent relationships and offers more than 65 correspondent services, such as providing lock boxes and online services for smaller banks.
Kerry Hall, president for the Austin operations of Dallas-based Texas Capital Bank, said correspondent banking succeeds when two banks find an inexpensive, mutually beneficial way to provide services to one another. Texas Capital has several relationships with other banks, but she declined to give specifics.
When entering a correspondent banking relationship, the banks' philosophies and values must match, Hall said. It's uncommon for institutions that might directly compete for customers to have such relationships.
"We have had the best luck with banks that don't have a presence in our market," Hall said. "But when it comes to sharing competitive information like customer information, there are ways to overcome that."
For instance, American Bank of Texas will prevent Wells Fargo from seeing the customers' names on each account, Smith said. Clients will deposit money into American Bank accounts, then bankers at American Bank will use identifying numbers at the bottom of each deposit slip to match the accounts.
Wells Fargo enjoys a reputation for seeking new revenue-generators, such as the deal with American Bank, said Scott Alaniz, research analyst at Dallas-based investment bank SAMCO Capital Markets.
"Big banks have millions ... of dollars tied up in facilities and have huge fixed costs with all that personnel, so to generate additional income to leverage the fixed cost is a great strategy," he said.
It's unusual for a small community bank such as American Bank to use a larger bank's branches, but it makes sense from a financial perspective, Alaniz said. The arrangement permits the small bank to turn the high fixed costs of building and owning branches into variable costs.
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