Less than five months after receiving a state charter to open a new bank in Greater Des Moines, Two Rivers Bank & Trust has increased its asset base to nearly $75 million, a feat that puts it on track to exceed its second-year projections by the end of this year.

Initially formed last year as a branch of Burlington Bank and Trust and now under its own charter, Two Rivers is working to differentiate itself from a host of competitors entering the Greater Des Moines market, said Two Rivers President Darrell Hughes.

Capitalized with $10 million raised from the sale of stock in its parent company, Great River Financial Group, to about 125 Central Iowa investors, the bank added another $10 million in debt financing to create what Hughes said is “probably one of the largest capitalizations for a de novo bank in the Midwest.”

“That gives us corporately over a $7 million (per borrower) lending limit, which helps us attract the commercial customers we’ve all dealt with previously,” said Hughes, a former Bankers Trust Co. executive who brought five experienced colleagues with him from Bankers Trust last year. Two Rivers is a subsidiary of Great River, which in addition to Burlington Bank and Trust owns Henry County Bank in Mount Pleasant.

Though Two Rivers opened as a branch of Burlington Bank and Trust, “our strategy all along was to be a stand-alone bank in the Des Moines marketplace,” Hughes said. “That gave us the opportunity to raise the local equity. That’s really a big part of our strategy, to have that local owner who is a very astute business person who will help us grow this business. We felt that the combination of the local ownership with a local board of directors would help us grow our model.”

Two Rivers, which opened its first branch office at 4500 Merle Hay Road in Johnston on May 2, is “very close” to choosing a site in West Des Moines for its headquarters as well as a location for its second branch, Hughes said. Other branch locations planned within the next four years include Ankeny and Ames.

Two Rivers’ broad-based local ownership, strong capitalization and local management distinguish it from other start-up competitors and make the bank a good fit for commercial customers, said Executive Vice President Bill Sullivan.

“We have a lot of commercial relationships,” said Sullivan, who with Steven Simon rounds out the bank’s top three executives. “You can see by our age that we didn’t believe in hiring a bunch of young people who didn’t have that. We think that’s where the other banks coming to town are going to have a problem; we have the client contacts and they don’t.”

Great River Financial Group was founded in 1987 by a group of about 120 Burlington-area investors. It began diversifying into non-bank services in 1999 when it bought Cady Insurance, the largest property and casualty agency in the Burlington market. In 2002 Great River established an in-house investment group, and in 2004 bought Hopkirk and Feightner, Fort Madison’s largest property and casualty agency. Also last year, Great River purchased a retail investment advisory group, Krantz Investments, which has since been merged into Cady Financial Solutions.

Two Rivers is the company’s first banking expansion into a larger metropolitan area in Iowa, and probably the first of several metro banking expansions it will make statewide, said Great River President Jim Olson.

“We’re trying to redefine ourselves from thinking of ourselves of a bank to being a group that provides banking, insurance and investment management services,” Olson said. “Really, our key selling point is that we have the largest menu of financial services in the Southeast Iowa market, the largest sales force to provide those services and the largest capital base within our regional market driving that activity.”

Two Rivers is similarly seeking to build up its portfolio of non-banking financial services in Greater Des Moines by buying local companies. In June, the bank purchased Mortgage Financial Group, a Des Moines residential mortgage loan origination firm, which will be managed by former owner Brian Lampe as a division of the bank. The bank is now actively shopping for Central Iowa-based insurance and investment services companies to buy to quickly establish itself within the local market, Olson said.

“We’re looking at acquisitions not only on the insurance level but on the bank level also,” Olson said. Though not many small banks are currently seeking to be bought, Olson said he’s expecting to see opportunities within the next five years.

“In the rural areas, I think you’re going to see ongoing aggregation because there’s no one to sell the family-owned banks or insurance groups to,” he said. “I think in Des Moines and the urban marketplaces, it will be for different reasons. It won’t be because of the ownership or the families involved. It will be more because of earnings and not being able to establish themselves and provide a return on investment for shareholders.”

Great River, which reached $250 million in total assets two years ago, is working toward a goal of $500 million by 2008 and a doubling of earnings per share, Olson said. “With Two Rivers’ growth to date, we think that’s a very reachable target,” he said.