Hoosier Banker 17 Andrew Smith to that of supporting changes in banking structure. Conversely, the former Independent Bankers Association of Indiana, now the Community Bankers Association of Indiana, fought forcefully for the status quo. The League of Economic Development, dominated by the major Indianapolis banks, fought for banking structural change. The forces were set for a battle, which in 1985 resulted in SB1. The most significant banking legislation in Indiana’s modern-day history was the passage of SB1, effective July 1, 1985. This bill approved both the expansion of bank holding companies across county lines (i.e., the establishment of multibank holding companies) and branching into contiguous counties. SB1 also approved interstate banking, a phenomenon of vast repercussions. As of July 1, 1985, the largest three banks headquartered in Indiana were American Fletcher National Bank, Merchants National Bank and Indiana National Bank. As a direct result of SB1, all of these financial institutions have been acquired by out-of-state bank holding companies (Banc One Corp., National City Corp. and First Chicago/NBD Corp., respectively.) Only the three major banks in Evansville, Fort Wayne National Corp. and 1st Source Corp., South Bend, remain as multibillion-dollar bank holding companies not affected by interstate banking. Interstate banking has also seen the entrance of Huntington Bancshares, First of America, Star Bancorporation, Fifth Third Bancorporation, PNC Corp., KeyBank and others. The aggregate effect of SB1 is indicated by the decrease in the number of independent banks in Indiana. As of July 1, 1985, there were more than 375 independent commercial banks operating in Indiana. By Dec. 31, 1996, the number of charters had dropped to 210. What nobody heeded in the mid-1980s was that, because of Indiana’s history of restrictive branching and holding company structure, banks in Ohio and Michigan were better-positioned than Hoosier banks to install their holding company affiliates in Indiana. In 1995 the Indiana Legislature approved legislation which permitted interstate branching. This legislation permits Indiana bank holding companies to operate in surrounding states, and at the same time permits out-of-state bank holding companies to change their holding company affiliates in Indiana into massive branch networks. What started in 1985 as a small landslide became an avalanche. Commercial bank holding companies, headquartered out-ofstate, entered Indiana banking. Structure is not the only change in banking laws. This year, through the efforts of the IBA, Indiana law permits commercial banks to sell insurance throughout the state. Indiana banks will be permitted to own insurance agencies and to provide full-service insurance sales and service in direct competition with the insurance industry. This change is an indication of the types of products and services Indiana commercial banks will offer in direct competition with other depository and nondepository financial intermediaries into the future. History of the Indiana Bankers Association The Indiana Bankers Association established its own office in 1905 when Andrew Smith, its first long-term secretary, commenced operations in an office in the Commercial Club. Not until 1996, a full 99 years after its formation, did the IBA purchase an office building at 3135 N. Meridian Street, Indianapolis. The new facility houses the IBA executive and staff offices and the Center for Professional Development, the site of frequent banker training sessions. As of July 10, the Indiana League of Savings Institutions has been operating its headquarters out of the building as well. During the first decade of the IBA, the secretary (later called executive vice president) was usually a member of the staff of the volunteer president’s bank. The first four IBA secretaries were Mord Carter, First National Bank, Danville; Samuel A. Morrison, Fletcher National Bank, Indianapolis; Orlando M. Packard, Indianapolis (bank affiliation unknown); and Charles L. Farrell, Capital National Bank, Indianapolis. Andrew Smith served as secretary from 1903 to 1924. He joined the IBA on a part-time basis, maintaining his position as vice president of Capital National Bank, Indianapolis, which later merged with Indiana National Bank of Indianapolis. Under Smith’s supervision IBA membership grew from 300 banking institutions in 1903 to more than 1,100 in 1924. During his tenure the legislative influence of the IBA also grew. The Association formed legislative committees and legal and protective departments. Ill health forced Smith to resign in 1924. The IBA Council of Administration bestowed upon him the honorary title of secretary emeritus. He died shortly after his resignation. Forba McDaniel became secretary upon Smith’s retirement. She originally joined the IBA in 1910 as Smith’s assistant after prior experience as a switchboard operator at Russiaville State Bank. Before taking on responsibilities as secretary, McDaniel founded Hoosier Banker. In January 1916 she published the first issue, a bulletin of four pages. In less than two years the publication grew to 48 pages. In 1933 McDaniel resigned from the IBA to join an investment firm and later became executive secretary to Herman B Wells, then-president of Indiana University. She subsequently served as secretary of the Chicago District Bankers Association and returned to Indianapolis to work for a stock brokerage firm. She died in 1970. While serving as IBA secretary, McDaniel was instrumental in developing the Association’s bank guard program – the precursor of the Indiana State Police – and the warning card system. Hoosier Banker lent $1,000 to the IBA in 1925 to assist with the bank guard program. In the 1920s armed bank robberies were becoming increasingly prevalent. The IBA spearheaded an attempt to foil robbers. Today’s Protective Bulletin, sent to Indiana bankers, established its roots from this time Forba McDaniel Reprinted from 1997 centennial Hoosier Banker.
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