From the June 2010 issue of Investment Advisor • Subscribe!

Partners in the Community

Two River Community Bank is 10-year-old financial institution based in central New Jersey with 15 branches in Monmouth and Union counties. William Moss, the bank's president and CEO, describes what the bank does as "plain vanilla banking," and Two River as a "medium-size" community bank that takes in deposits in central New Jersey and lends the money back out to individuals and businesses in the same area.

"Because we're plain vanilla and very straightforward, what you see is what you get, we are a valued partner," he says, noting that bank customers often will come in and ask for help when they need an attorney, or an accountant, or a financial advisor.

Investment advice and financial planning, not surprisingly, come up frequently among the referrals that banking customers need.

"We were looking for a partner that had the kind of ideals and high-quality service that would match up well with Two River Community Bank, and after a significant amount of due diligence, we settled on the Harbor Lights firm," Moss says. "It's critical that you have the right fit, in terms of personality, services, and the platform that they use."

Harbor Lights fit the bill according to all those criteria and more.

Moss acknowledges that the firm's affiliation with LPL was "an integral part of the decision" in choosing Harbor Lights. "They are one of the largest platforms in the country and deal with a vast number of community banks," he says. "That's a time-tested model and that's what you're looking for. You don't really need to re-invent the wheel with a lot of this. It's about service and results. They've posted results."

Two River has a financial interest in the arrangement with Harbor Lights, but Moss makes it clear that the additional revenue isn't the driving factor for the bank. It's more about intangibles like offering a value-added service and giving customers another reason to be happy with their relationship with the bank. It also helps mitigate some of the bank's risks.

In the simplest of terms, the bank makes most of its income through interest payments on the loans it puts out and the bank has a fiduciary duty to minimize the risk inherent in the loans it makes.

A loan recipient who has an estate plan, a succession plan for his business, enough insurance so that he can buy out a partner's share if that partner dies, or to pay the estate taxes so his children won't have to sell the business, is a much better loan risk than an individual who doesn't have an up-to-date will and is likely to have an "illiquid estate."

While not all of the bank's depositors are looking to work with an advisor, Moss says "Over time you do get a fair number of individuals or companies that are in need of services and sometimes the bank customers don't even realize they need them.

"There's a whole host of pertinent, meaningful topics that we as bankers can have with our clients that help them retain wealth, within their families, within their companies, by helping that company continue. "If what the client needs is financial advice, then Moss wants to make sure he has the right partner to give the referral and is confident in his choice of Harbor Lights and its principals. "They can communicate with the common man up to CEOs and executives of larger companies," he says. "They can bridge the full gamut of individuals who need their services."

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