My name is Allen Olson. I am President and Chief Executive Officer of the Independent Community Bankers of Minnesota (ICBM). ICBM is a trade association of some 300 community banks located in the State of Minnesota. Think of the mythical Lake Wobegon made famous by Garrison Keillor. Then think of a bank on its Main Street and you have an accurate mental picture of the kind of bank I represent.
Minnesota is the home of two of the more successful superregional banks in the United States - Norwest and First Bank System (soon to become US Bancorp) - and a very aggressive and successful former thrift, Twin Cities Federal, now a commercial bank, all of which have owned and operated proprietary EFT/ATM subsidiaries since the 1970's when electronic funds transfer activities were first implemented on a commercial scale. These proprietary ATM networks - InstantCash (Norwest); Fastbank (First Bank System) and Express Teller (Twin Cities Federal) - control over 98% of traditional ATM activity in Minnesota. Hundreds of "plain vanilla", cash only ATM's have been placed in retail locations in the state over the past year or so in addition to the established bank - retailer ATM relationships. This recent flurry of ATM placement is clearly the result of the Cirrus and Plus rule change allowing surcharging.
Until 1990 the community banks I represent, if they offered ATM services, could obtain such services only from Minnesota's proprietary ATM networks, the parent banks of which were almost always the community banks' most significant competition in their respective market areas. In 1990 ICBM spearheaded the organization of a fourth Minnesota ATM network as an alternative source of ATM services for small, local financial institutions. A partnership to provide operations and technical services was consummated with SHAZAM, the ATM and electronic banking services provider to all financial institutions in Iowa. At this time SHAZAM serves approximately 100 local banks and approximately 40 credit unions in Minnesota. Almost all of SHAZAM's customers in Minnesota are outside the Twin Cities Metro.
During the latter part of 1996 after ATM surcharging was authorized the question of its effect on ICBM banks became increasingly important, particularly because of the dominance of ATM services in Minnesota by InstantCash and Fastbank. ICBM leadership polled attendees at its 1996 convention with the surprising result that approximately two-thirds of those responding would support a legal ban of ATM surcharges. Further deliberation by ICBM leadership resulted in the board of directors resolution attached as Exhibit A. The resolution was communicated to ICBM's member banks (Exhibit B) and a bill banning ATM surcharges was introduced in the 1997 Minnesota legislative assembly. This legislation was not heard in 1997 and is pending for the 1998 legislative session.
Thank you for your attention. I'll take any questions.
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