Abstract: Ed Crutchfield, CEO of First Union Corp., predicted in a recent speech that the industry was headed for 2,000 banks in ten years. He also said there would be about 10 to 15 dominant financial services companies resulting from the current consolidation as well as a number of smaller niche players, like private banking companies. He didn't happen to mention community banks other than to point out that First Union was a community bank when he started working there. Crutchfield then said: don't like bigness. I grew up in a town of 900. But they don't pay me to be nostalgic. No, they wouldn't. But is community banking just a nostalgic notion, then? Hardly. Several community banks we can think of outperform the First Union offices in their markets. Crutchfield's prediction is the lowest we've heard. Even if he's only half right, there will be about 3,000 fewer banks than now. So why are we devoting so much coverage this month to community banking topics? Because the 3,000 institutions that may be gone by 2008 are still very much with us right now. Their managers need whatever information will help ensure that they are among the surviving entities, or, alternatively, that they present their owners with the best possible payout. (In the latter case, they can then start a new community bank--but more on that in a moment.) That need for information is the reason behind our second annual community bank competitiveness survey, co-sponsored by ABA's Community Bankers Council. Executive Editor Steve Cocheo developed the survey and prepared the report, which begins on page 47. There's a wealth of data in the report, which covers funding issues, sources of noninterest income, product offerings, partnering, and use of the Internet. One of the intriguing findings is that community banks, while showing increased activity on the Internet, are still opening branches. So although the demographics of Internet users are constantly broadening, bankers clearly sense that many people continue to value a physical facility. Getting back to the matter of new banks, a second feature this month (p.67) looks at the surge in de novo banks. The numbers didn't set a new record last year, but were surprisingly strong. Most of the people starting the new banks are former officers of large banks seeking to capitalize on customer fallout following mega-mergers. The trend confirms one of Crutchfield's points, because many of these de novos begin life focused on a particular product or market niche--small business, leasing, etc. A third community bank feature is this month's cover story, p. 36. It demonstrates just how innovative and competitive a small bank can be. …
Publication Year: 1998
Publication Date: 1998-02-01
Language: en
Type: article
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