Magazine article American Banker

Bank Presidents against Sale to Nonbanks

Magazine article American Banker

Bank Presidents against Sale to Nonbanks

Article excerpt

Most community bankers oppose mergers with other types of financial services firms and are dead set against banks being owned by commercial enterprises, according to a survey scheduled for release today.

The Chicago consulting firm Grant Thornton LLP sent questionnaires to more than 5,000 community bank presidents last fall.

Of the 600 who responded-with average assets of $155 million-63% said they opposed cross-ownership of banks and brokerage and insurance companies.

Moreover, 68% objected to nonfinancial companies' owning banks, up from 54% from a year earlier.

"All the lobbying that's going on in Washington has put that issue front and center," said Diane M. Casey, national director of financial services at Grant Thornton and administrator of the annual study. "It's obviously had an effect on community bankers."

The survey report, titled "The New Age of Community Banking," explores a range of issues affecting community bankers, from financial modernization efforts in Washington to investments in technology to automated teller machine surcharges.

Results show that most bankers, 66%, believe there will be "substantially fewer" community banks in the next five years. That is up from 57% just one year earlier.

Yet most bankers said merger mania would not affect them, with 81% citing "independence" as a key component in their future success.

Funding has emerged as a major concern among community bankers. In last year's survey, 65% reported an increase in core deposits for 1996.

This year only 60% reported deposit gains, while nearly two-thirds said they expected funding to be tougher in the next five years as customers shift their money into stocks, mutual funds, and other investments.

For Joe Williams, president and chief executive officer of $90 million- asset American Heritage Bank in El Reno, Okla., it is already a concern.

"Our deposit base is primarily older customers who are risk-averse and who have memories of the Depression," said Mr. …

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