Services vs. Familiar Smiles Some Consumers Sorry to See Small Banks Taken over While Others Welcome Upgrades

Article excerpt

Byline: David Roeder Daily Herald Business Writer

William Gooch Jr. remembers the day in 1993, not long after he opened his Community Bank of Elmhurst, when a first-time customer walked in and froze in her tracks.

The woman, whom Gooch knew from his former post at York State Bank in Elmhurst, stood there and gaped. She saw the familiar faces of 14 former York employees Gooch had hired for his venture.

Then she cried out in glee, "I'm home."

Most people don't have such an emotional reaction to a bank, but they do have preferences about the repositories of their money. Some, like Gooch's customer, flee banks whose characters disappear beneath mergers and buyouts. They want a bank that they know and that knows them.

"Right after the name changes on the door of a bank nearby, those tend to be our best days for opening new accounts," said Dan Miller, president of American Chartered Bank in Schaumburg.

Others, whether individuals or companies, like the convenience and added services of a big bank and appreciate not having to go to downtown Chicago to get them. They have welcomed the suburban migration of downtown banks such as First Chicago NBD, Harris Bank and the LaSalle banks.

In the 1990s, the suburban marketplace has served both points of view, but at a price. Bankers themselves like to call theirs a "relationship business," but a lot of those relationships have been disrupted.

Banks are bought and personnel get promoted or fired. One of the main justifications for the industry's consolidation is cost savings: "excess" employees can be cut.

A Coopers & Lybrand study has concluded that mergers and advancing technology will lead banks to reduce employment by 50 percent over the next decade.

But as the staff departs, so does service, many people complain. Some say the pressure to cut costs even affects smaller institutions.

"You go to Fairfield Savings to cash a $20 check and you're there 10 minutes. It's really aggravating," said Long Grove resident Sheri Meketa.

She said she does most of her business at American Enterprise Bank in Buffalo Grove, which opened last year, part of a wave of startups mostly in affluent suburbs. Meketa said she favors American Enterprise because its staff is fast, friendly and responsive.

The appeal of the so-called boutique banks is frankly nostalgic - banking the way you remember it. You might not have telephone or computer access to accounts and the bank might not sell you mutual funds, but employees will remember your name and there's no 800 number to keep you on hold.

Plus, some smaller banks charge less in account fees or have lower minimum balances to avoid charges. Account deals vary widely, however, and smaller banks may be open fewer hours and have less convenient access via teller machines.

The boutiques are a curious phenomenon. They are taking hold despite the spreading canopy of the big banks. The local Big Three - First Chicago NBD, LaSalle and Harris - combine for a market share of better than a third of all deposits, probably triple what they had a decade ago. That was before state law was changed to allow suburban branching.

But last year, 11 new banks were chartered in Illinois. Since 1990, 31 startups have been established in the state even as the total number of Illinois institutions has fallen some 20 percent. None of the startups has failed.

Another believer in small banks is Art Biddle, owner of Bee Energy Inc., an oil wholesaler in Westmont. He, too, followed Gooch out of the old York State Bank after it was sold to First Colonial Bankshares and later to Firstar Corp. …