As a customer, do you know the difference between a corporate entity bank and a cooperative bank? Heritage Land Bank operates as the latter, but do you know why this is good for you?
Banks have three internal groups of customers; investors, depositors and borrowers. All of them are important, but unfortunately they all have a different "wants" when it comes their involvement in a bank. Here's how it usually breaks down:
- Investors want the bank to make money and thus want higher loan rates and lower deposit rates.
- Depositors don't care if the bank makes money or if borrowers have to pay more, they just want higher deposit rates.
- Borrowers don't care if the bank makes money or depositors get less, they just want the lowest lending rates.
Bank CEOs, usually without a lot of success, try to get investors to become customers, and depositors and borrowers to become owners - in an attempt to get everyone on the same page.
At Heritage, the world is much simpler. How? There are no depositors (we get our money from the national money markets) and by cooperative charter, borrowers from the bank are also bank owners. We know borrowers still want low loan rates, but since they are also seen as owners of the bank, they also understand that by Heritage making money the chances of them receiving a patronage check at the end of the year are higher.
Do you see how the borrower always wins? If a higher interest rate payment turns into profitability for Heritage, it means the borrower will receive a larger patronage check at the end of the year. Sounds like a win, win to me. Check out the rest of our website to learn more about all of the different financial options that we offer to our customers who are looking to buy land in Texas.
William "Bill" Tandy, Chief Executive Officer at Heritage Land Bank, has been in the banking industry for 35 years, serving as a bank president and CEO for nearly 25 of those years. Tandy enjoys sharing his banking and finance knowledge with business partners and stockholders.