Botched RBC transition a boost for local banks

The only remaining locally-owned bank on the barrier island, Marine Bank & Trust, reports it has seen an upsurge in new personal and small business customers this spring that is at least in part attributable to the botched transition of the old Indian River National Bank (IRNB) to its new ownership by the Royal Bank of Canada.

While IRNB ceased to be locally owned four years ago when it was acquired by Alabama National Bancorp, it maintained the illusion of continuing to be a local bank by operating under the comfortable old “Indian River” name and building a rival to the Palace of Versailles as its headquarters on the Vero Beach mainland.

But the illusion of local ownership held no interest for the Royal Bank of Canada, whose wholly owned U.S. subsidiary, RBC Centura Banks, Inc., completed its acquisition of Alabama National Bancorp -- and hence IRNB -- earlier this year.

In April, the IRNB bank signs were all changed to the mystery letters RBC, new debit cards were issued that didn’t work, customers stood mortified in Publix as cashiers told them their purchase of groceries had been rejected, longer holds were placed on deposits, and for many, interest-bearing checking accounts were eliminated.

The transition, in sum, was little short of a customer-relations disaster.

But RBC’s travails seem to have been good news for its competitors, and for none more so than Marine Bank, which has its headquarters directly across Beachland Avenue from what used to be the only IRNB outpost on the barrier island.

“I think it did create a lot of opportunities for us and others because of the frustration level of people,” said Marine Bank CEO C. Andrew Lawrence.

“Indian River National Bank started out like we did, and they were very good, they had great growth. They were very tough competition,” Lawrence said. “When Alabama National bought them, what they did right was they didn’t change anything. Unless you were really into banking, you had no clue anything had changed. They still had the same people, the same computer systems, et cetera.

“When the Royal Bank of Canada bought them, that all changed. When a very large organization like that is buying a bank, they always say nothing is going to change. But because of the amount they paid, they have to make changes to make the operation more efficient and that’s when the changes take place that affect the individual customer,” Lawrence added.

The IRNB transition to RBC marked the second time in little more than a year that a local bank was scooped up by an out-of-state big bank. In early 2007, Fort Pierce-headquartered Harbor Federal Savings Bank – which had a large and very active branch on route A1A just south of Riomar – was acquired by Ohio-based National City Corp., which changed the bank’s name to National City.

“That also created some opportunities for us because National City was not into the same kind of construction lending as the old Harbor Federal was,” he said. “We were able to capitalize on that and pick up some business from very good solid Vero Beach companies.”

While much of Marine’s growth is now occurring on the mainland, Lawrence said one area Marine has “really focused on, and where we are having a lot of success, is in serving the needs of small businesses and retail business on the barrier island.

“Our real niche is small business -- helping the small business person,” he said. “I think a small, locally-owned bank is better able to do that because the customer is always dealing with a decision maker. All decisions are made within the four walls of that building. All the directors are local people.

“In a larger bank, the decision maker is usually in another state or another town so they don’t have the opportunity to sit down and talk to the individual borrower,” Lawrence added.

A response to this article from an RBC Bank executive can be found on the Your Opinions page.