Douglas M. Lester has a theory. The chairman and chief executive of Trans Financial Bancorp., a $1.6 billion asset bank based in Bowling Green, Ky., said he believes that superregional banks will begin - in the not too distant future - to pull out of small communities, creating greater opportunity for institutions like his.
"It's hard for (big banks) to compete on a personal basis in a lot of the smaller markets. I think they are finding out they are better off competing strictly on cost and going to the metropolitan areas."
Is Mr. Lester right? As superregionals continue to focus on reducing their cost structure, are they going to pare down the branch network beginning in smaller towns?
Not surprisingly, there's a big difference of opinion.
Dennis E. Nixon, chairman and chief executive of $2.7 billion asset International Bancshares in Laredo, Tex. (see story on page 8A), questioned whether people in small towns will be prefer the new electronic delivery channels being introduced by superregionals over sitting down with their local banker.
"So then it becomes the question: Does NationsBank still want to compete in Pleasanton? My thinking is they probably won't."
And Andrew O. Brown, an analyst with Salomon Brothers Inc., New York, said there "was a distinct probability" that community banks could eventually benefit from a retreat by larger rivals.
But he noted that a few major banks - St. Louis' Mercantile Bancorp., Norwest Corp. in Minneapolis, and Synovus Financial Corp., Columbus, Ga., - have prospered with a decentralized super community approach, and will likely continue to do so.
Anat Bird, managing partner of FinExc Group in New York, however, said she "would not expect big banks to pull out of small communities."
While banks may reconfigure branch operations with an eye toward cutting overhead, she does not expect to see big banks abdicating their positions in small communities.
G. Joseph Prendergast, president of Wachovia Bank of Georgia, agreed. "I think maybe it's wishful thinking."
He points out that Wachovia Corp., a fairly centralized superregional that plans to cut the size of its branch network over the next few years, has been very successful in rural communities. "If you looked at the profit components at Wachovia and all of a sudden just slashed those out you would make a big dent in our earnings. So Wachovia as a general statement would have no intention whatsoever of pulling out" of rural communities.
