The paper, titled “An Opportunity for Community Banks: Working Together Collaboratively,” describes ways in which community banks might collaborate to lower costs and obtain specialized expertise. The paper outlines how community banks can structure cooperative arrangements, and emphasizes the need for effective oversight of those arrangements.
Community banks can collaborate in several ways, according to the OCC, such as:
- exchanging information and ideas;
- jointly purchasing materials or services;
- sharing back-office or other services;
- sharing a specialized staff member or team;
- jointly owning a service organization;
- participating in disaster mitigation agreements; and
- jointly providing/developing products and services.
As with loan participations and syndications, the guidance makes clear that bank collaborations should be documented in a binding agreement that allocates the resposibilities and risks associated with the activity.
Ideally, collaboration in areas in which it makes sense would enable community banks to achieve better outcomes at lower costs, increase their range of services, and enhance the expertise available to them.