Bankers' bank

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A special type of bank that is created by a group of banks. Bankers' banks exist for the sole purpose of servicing the charter banks that founded them. These banks do not service the public in any fashion, but are designed to provide community banks that would usually only be available to national and international banking conglomerates.    

Investopedia Says:
Bankers' banks help community banks to effectively compete with larger banking entities with the services they provide. The first bank of this kind was created in 1975 in Minnesota. There are currently 22 of these entities nationwide that serve over 6,000 community banks in 48 states.

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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.

See also

• Corporate credit union

External links

• Bankers' Bank Council
• Silverton Bank
• PCBB
• TIB-The Independent BankersBank
• The Bankers' Bank of Kentucky

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