Tech solutions aid bank growth – Focus

RVP Business Systems President and owner Billy Knorpp doesn’t think too much about banking unless he’s asked about it.
He and his 16 employees of the Boise company are too busy selling, installing and servicing point-of-sale systems. RVP also offers credit-card processing services.

But RVP is benefiting from online banking technology, Knorpp said. Managers at his Overland Road office pay employees electronically, and can instantly monitor and manage credit cards that RVP personnel carry to installation and service sites up to 300 miles away, he said.

“We don’t have to leave a lot of money in accounts that are non-interest-bearing,” he said.

RVP officials can quickly move money from interest-bearing accounts to checking accounts to pay suppliers, and easily monitor how much money the company has available to take advantage of early payment programs to get discounts from vendors, Knorpp said. The company keeps parts, supplies and a few small systems in stock. It has some systems shipped to its shop for customers, and some systems shipped to customers’ sites.

At Idaho Trust National Bank in downtown Boise’s BoDo development, President Tom Prohaska said technology is playing a role in the strong growth that has materialized since Idaho Trust six months ago converted from a trust company into the first new, Boise-based, commercial bank in a decade.

Businesses using Idaho Trust’s new Ardy remote-deposit system deposit checks from employees’ desks via a scanner instead of going to the bank office. Funds are credited immediately.
Business clients get Ardy for free if they maintain $15,000 in a non-interest-bearing business checking account or $20,000 in an interest-bearing account. Monthly fees of $39 and $49, respectively, are charged if the account balances drop below those minimums.
Idaho Trust pays about $1,000 for each Ardy system, made by Unisys, Prohaska said. He said the bank can give away a lot of machines for what it costs to build and open a new branch office.
The bank does plan to open a couple more offices, but it also aims to devote growth capital to technology systems that can draw new customers, he said. Ardy already is extending Idaho Trust’s footprint, as clients all over the Treasure Valley have the system, he said.
Remote-deposit scanners came out just over two years ago -– Zions Bank was an early adopter – following federal “Check 21” legislation that provided guidelines for how checks can be converted into electronic form for faster processing.
“This is one of those ideas where, technically, it has evolved to the point that it really is pretty easy to use,” Prohaska said. Banking IT developers have done a good job brining the remote-deposit systems to the customer in accessible, user-friendly form, he said.
“We think the market is huge,” he said.
Check 21 was enacted to cut down on cumbersome routing of paper checks around the country via the longstanding check-clearing system, but it did much more, KeyBank’s Joe Cornelius wrote in the March issue of Exchange Magazine. The law inspired new processes and technologies to increase efficiency and effectiveness, and the creation of new services, he wrote.
At Zions, Boise-based Lorie Hilton, vice president of cash management services, said she sees ongoing demand for online banking, electronic account-reconciliation tools, and remote-deposit systems. Depositing payroll into employees’ accounts electronically is common, and there is good demand for “lock box” products, she said.
Customers of businesses that use lock-box arrangements send their payments and invoices to a bank-accessible post office box. An authorized bank employee picks up the mail, which is opened by electronic mail sorters so that all financial details of the payments or invoices can be captured electronically for immediate processing, according to information from Zions.
Also on the technology front, Allegiance Inc. last week announced that its CustomerVoice system was selected by Spokane-based Washington Trust Bank, the largest privately held bank in the Northwest. The system acts as a single repository for all of the bank’s feedback by customers, whether it is received through surveys, the mail, phone, via the Internet or e-mail, Allegiance said in a statement. Washington Trust, according to Allegiance, views CustomerVoice as a means by which it can communicate with more people quickly and more directly, and identify issues sooner.

Competition keen
Chris Loucks, a Boise State University finance professor who specializes in banking issues, said she doesn’t see any problems in the southwest Idaho banking sector now. Banks are doing well in southwest Idaho, she said, and the area so far has seen fewer sub-prime mortgage problems than have many metro areas.
Deposits are growing in southwest Idaho, she said, citing annual Federal Deposit Insurance Corp. reports on individual metro areas. Some community banks are recording good-sized rates of increase from year to year, she said.
At Idaho Trust, Prohaska said growth has exceeded expectations. Factors include an experienced staff, a well-paying money market account, and the fact that the bank opened with five times more capital than any new bank in Idaho history, he said.
“This has allowed us to offer larger loans and provide the safety and soundness of a very strong financial institution,” he said. Idaho Trust has deposits of $25 million, total loans of $20 million and total assets of $52 million, he said.
Demand has been strong for business banking and for private business banking services, Prohaska said.
“Customized solutions are the essence of private business banking,” he said. “We are constantly looking for new technology and industry trends that will benefit our clients.”
A number of Idaho Trust’s longstanding clients for trust administration and investment management services opted for additional banking services when Idaho Trust became a full-service bank last year, Prohaska said. This activity has been a major factor in the bank’s early success, and there is potential to draw banking clients toward considering trust services, he said.
Trust departments are a rarity in community banks started in Idaho in the past decade, and were affected by the big-bank mergers of the 1990s, Prohaska said. Multi-state, corporate banks moved the majority of their trust operations, he said.
Now, the biggest challenges facing Idaho Trust are building brand awareness and continuing to execute on its business plan.
Boise-based Syringa Bank is off to a strong start this year and recently secured $21.7 million in growth capital by offering additional stock, President and CEO Jerry Aldape said.
Commercial and mortgage lending, and short-term construction lending, are strong, he said. Mortgage lending is back to healthy 2004 levels in contrast to the boom of 2005 into early last year, he said.
If internal trends continue, Syringa will increase total loan dollars outstanding by about 50 percent this year, Aldape said.
Banks are competing briskly for deposits, as loans are in greater demand in high-growth areas like Idaho, he said.
Other challenges include finding high-quality employees in a tight labor market – another area where banks compete – and complying with new and upcoming regulations, Aldape said. Syringa Bancorp directors are preparing the company now to comply with the Sarbanes-Oxley Act that covers auditing and governance, even though Syringa does not yet have enough shareholders of record to be required to comply, he said.
Gary Quast, chief credit officer at Boise-based Idaho Banking Co., said credit quality remains excellent. The bank recently reported record earnings for the third consecutive quarter, he said.
There has been some slowing in the real estate sector – short-term, speculative construction loans are taking longer to convert to end mortgage loans due to increased on-market times in certain areas, he said.
“The increased market times haven’t impacted our borrowers’ ability to perform” on loans, Quast said. Idaho Banking Co. and many other community banks sell their home mortgages in the secondary market, he said.
Financial institutions face a flat yield curve, with short-term interest rates similar to long-term rates. Quast said this pressures banks as to how they price and structure financing.
Some borrowers for commercial buildings want to lock in rates for longer periods, he said.
 “We usually go three to five years and then re-price, but the flat curve is encouraging a 10- to 15-year market,” Quast said. Idaho Banking Co. participates minimally in the fixed, long-term-rate market because the interest-rate risk is too high in today’s market, he said.
Now that money is flowing back into the stock market, deposits are harder to come by, Quast said. That encourages irrational pricing of deposit products such as certificates of deposit, he said.
“We see that with the CD wars,” he said. Banks are starting to advertise one-year CDs yielding as much as 6 percent; this combined with a flat yield curve will inevitably compress margins.
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To contact the author, e-mail brad.carlson@idahobusiness.net