History

In the mid-80s, the OCC's Owen Carney suggested to the ICBA (Independent Community Bankers of America) that they consider starting their own securities broker-dealer operation. He cited several of his personal concerns:

• Many correspondent banks were no longer providing brokerage services to their downstream correspondents
• Many new broker-dealer operations were springing up to fill the void
  Investment products were becoming much more complex with the advent of asset-backed securities and other hybrids
• Many of the new brokers did not know enough about the new products to properly explain them to bank investment officers, and
• "The combination of ignorance and greed on the part of the brokers spelled danger for community bankers."

Rather than start their own organization from scratch, the ICBA's Bank Services Committee began an intensive search for a partner who could help them get a running start. With the help of an outside consultant, they sent out a Request for Proposal to 33 qualified firms nationwide. Over the next six months, they reviewed proposals, listened to presentations, interviewed potential candidates and finally selected Vining Sparks based on several outstanding characteristics. Vining Sparks had:

• Expertise as a community bank investment specialist
• Strong capital base for financial stability
• Unlimited Street lines-of-credit for competitive securities pricing
• Reputation as a fair and honest broker-dealer and a clean NASD disciplinary history
• Strong commitment to educational activities
• Analytical capabilities such as:
  • Popular A/L Simulation Model
    
  • Bond Swap Software
    
  • Portfolio Planning Systems
    
  • Full time CPA consultants
    
  • Full time software developers

Committee members then worked with Jim Vining and his staff to put an organization in place that could best meet community bankers' needs over the long term. They established ICBA Securities as an introducing broker with a charter board of directors, seven of whom were community bankers and four of whom were past-Presidents of ICBA. ICBA Securities was also established as a service of the ICBA Community Banking Network®, a wholly owned subsidiary of the Independent Community Bankers of America.

With this solid organizational structure, ICBA Securities provides community bankers access to the following:

• National clearing facilities
• Twenty-five full time traders
• 120 dually-registered NASD representatives
• Ten office locations
• Consulting CPA staff
• Proprietary software
• Analytical systems
• Educational activities

ICBA Securities' directors have implemented a number of policies to help ensure that ICBA Securities' customer banks receive quality investment products, services, and educational programs at competitive market prices. For example, ICBA Securities maintains a list of securities that are considered to be generally suitable for community bank portfolios. A second list includes securities that are suitable only under certain conditions; i.e., for reducing interest rate risk, trading, etc. Although bank regulators allow banks to invest in additional securities that are not on ICBA Securities' list, ICBA Securities' directors do not consider them to be suitable for most community banks and ICBA Securities' sales reps are prohibited from actively marketing them.

In addition, ICBA Securities sends every new customer all the information required by the "selection of securities dealers" regulations. Also, ICBA Securities financials are automatically mailed after each annual audit. ICBA Securities directors want to ensure that all customers' ICBA Securities files are complete, up-to-date, and in compliance.
Other policies include:

• Minimum educational standards for representatives
• Clean NASD disciplinary histories for representatives
• Fair and competitive pricing guidelines
• Daily monitoring of each and every ICBA Securities transaction

ICBA Securities has a strong heritage, a strong organization, and a strong clearing broker, Vining Sparks. These factors, and solid support from the independent banking community, have enabled ICBA Securities to execute transactions for over 1,700 community banks since it was licensed in 1989.