IBC Strategy Targets Customer Convenience

When regional banking leader and commercial lender IBC Bank broke out of its Texas borders and charged into the Oklahoma market in 2004, it was a $5.3 billion Laredo-based institution with a goal of making itself more convenient for its customers.
Four years and 21 in-state branch additions, relocations and remodels later, it is an $11 billion bank, with 58 branches statewide, 18 of them in Green Country, and its commitment to its strategy remains strong.
“I have said it since day one, and I’ll say it again today – we continue to develop our infrastructure and build facilities so we are more convenient to our customer,” said Bill Schonacher, IBC Bank’s Tulsa market president. “Any location that we build fits one of two criteria: it’s an infill where we need a presence, such as a location that we have acquired on Peoria Avenue in the Brookside area, or its an expanding market, such as the location we have acquired on Memorial Drive at 120th Street.”
“Those decisions make us more convenient to our customer,” he said. “That, combined with our (open) seven-day philosophy on the retail side, we believe is pretty unbeatable.”
Schonacher has been the Tulsa market president since 2004 when IBC Bank’s holding company, International Bancshares Corp., bought Local Financial Corp., an Oklahoma City-based holding company that operated Local Oklahoma Bank, and made its move into Oklahoma.
The growth he has overseen in the Tulsa market reflects the “aggressive and innovative attitude to ‘Do More’ for our customers and our communities” extolled on the www.ibc.com Web site.
? The bank has opened five new branches in the Tulsa area, including Owasso, Sand Springs and three locations in Tulsa – 2808 E. 101st St., 4202 S. Garnett Road and 7021 S. Memorial Drive.
? It expects to open three more branches in Tulsa this year at 81st Street and Garnett Road, 121st Street and Memorial Drive and 4631 S. Peoria Ave., and it has acquired property at US 66 and Aspen in Verdigris, with an opening date to be announced.
? The bank rebuilt the Claremore branch, remodeled the Sapulpa and 8202 E. 71st St. offices and relocated facilities in Miami, Okla.; and to 6412 S. Elm Place, Broken Arrow, and 5302 E. Skelly Drive.
? The bank is in the middle of a $2 million renovation of the Green Country headquarters, 2250 E. 73rd St., where it is adding 12,000 SF for a total of 35,000 SF.
Statewide, since July 2004, IBC initiated 21 construction projects, including 11 new locations and 10 relocations or renovations, and will open a new 40,000-SF state headquarters in Oklahoma City, 3817 NW Expressway, later this year.
The bank said it has spent $40 million in total expansion costs since 2005 and, by the end of 2009, plans to invest an additional $15 million in 10 new facilities. It has a presence in more than 30 communities in Oklahoma.

With bankwide loans exceeding $5.5 billion at March 31, 2008, Schonacher said one of the priorities for the Tulsa market was to rework the commercial loan portfolio.
“We have been able to recraft this loan portfolio to a really nice mix of conservative business that makes sense, that is very tolerable to IBC’s liking,” Schonacher said. “We feel like we have had a lot of success at that.”
With the commercial portfolio standing at about $250 million for the Green Country division, Shonacher said that represented a growth of a ”little bit,” noting that “our growth plan is long term in every respect.”
“We don’t accept unnecessary risk for short term gain,” he said. “It juts doesn’t happen here, and that’s what is important to us. I have to be careful because we are a public company, but, in the past, I am happy to report that we have had zero commercial loan past dues over 60 days.”
IBC made headlines in the past month when it provided $23.5 million in Senior Secured Credit Facility for Construction financing to Presidian Companies and its partner Mayo Hotel and Lofts L.P. for the restoration of the $40 million luxury hotel together with upscale residential lofts.
Groundbreaking for the project, which is slated for reopening in late 2009, was held July 1 at the Mayo Hotel, 115 W. Fifth St.
Although the downtown hotel and loft market in many ways represents untested waters for local financiers, Schonacher said IBC backed the project in part because of its relationship with the borrowers and its importance to Tulsa.
“We feel like we structured the transaction very well to protect our shareholders the best we could,” he said. “We put faith in people we know, and people we have done business with, and people that we know deliver – that’s what drove that project.”
He said the project is also important to IBC because of the statement it makes to the Tulsa business community.
“It not only says IBC is here, it says IBC is here to participate and be a part of our business community,” he said. “It is certainly not the largest loan we have done here – we have many relationships that are larger than that. It is clearly one of the most visible projects that we have participated in.”
Schonacher said IBC was not as successful in at least one bid for visibility in the downtown market – the naming of the new arena.
“As a matter of fact, we were interested. We still think it is a fantastic project,” he said. “We were interested at a certain level, and business is business. The arena needed a higher level of dollars than we were willing to put into our bid package.”
Bank of Oklahoma won that honor with an $11 million, 20-year commitment for the naming rights to the arena.
“We congratulate BOk,” Schonacher said. “They have certainly shown over the years that they are a big supporter of Tulsa.”
How about the opportunity to put IBC’s name on the downtown Drillers ballpark?
“I haven’t thought about it,” Shonacher said, noting that supporting the community is a priority for IBC.
“It’s not an issue of putting your name on buildings, even though supporting local projects is very important,” he said. ”To us, it goes down to one of our core beliefs, and that is we give back to the community we are in. Since 2004, I can’t imagine how many thousand of hours of volunteer service our employees have provided to not only our community but to the state of Oklahoma.”
A Time for Studied Growth
Although IBC is solidly into its growth phase in Oklahoma and the Green Country market, it is approaching expansion cautiously in the crowded banking arena, Schonacher said.
“What we want to become in Tulsa we have already started to become,” he said. “Convenience is No. 1, but we believe in responsible growth in our franchise. We don’t do things just to grow size.”
Schonacher said IBC’s expansion efforts are moderated by its commitment to return shareholder value.
“While it may seem very aggressive from the outside, our growth is very calculated. We have pretty strict hurdles that we want to maintain or hit once we open a new location from the retail and commercial side,” he said.
Schonacher said IBC is large enough to handle most loan requests and provide almost any product or service its customers need.
“But we are run with a really close pulse to the local community that we are in. That is what we think makes us different,” he said. “Tulsa is over-banked – I don’t think there is any secret to that – but what we have to do is, we have to deliver our product and service the way we believe is going to make us successful. In our model, having brick and mortar is important.”
Schonacher said IBC has a “robust” on-line banking program brick-and-mortar retail system that allows IBC to be as convenient as possible to its customers.
“We have that 24-hour delivery online, but brick and mortar allows us to deliver face-to-face retail service seven days a week,” he said.
He said the franchise’s efforts to provide full seven-day operation have been “very successful.”

Schonacher said IBC faced three major challenges when it entered the Oklahoma market.
“One, our existing locations were pretty good, but they were tired. They needed to be renovated,” he said, citing the 71st Street and Memorial Drive location.
“In Sapulpa, we did the same thing. We spent a lot of money bringing it up to IBC standards, so it is very customer-friendly.”
Then the bank had to find new locations that fit within the footprint of the existing franchise, “basically infill and backfill locations, so we became the franchise of convenience that we wanted to be,” he said.
The third challenge was finding new locations that were reasonably priced and made “sense in our growth pattern and the growth pattern of the city,” Schonacher said.
“Today, we have pretty much gotten over challenge one and two. We have a little bit of that left, but now we are squarely in challenge three, finding additional locations,” he said. “Now I can actually look at the growth in our region, and I can bank a little bit of this land for a while and get it for a reasonable price rather than paying a really high dollar for infill locations.” ?

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