Bankers constantly wrestle with the question of centralization versus decentralization.

This issue is especially critical for the growing number of multibank holding companies avowing a commitment to super community banking.

By definition, such organizations seek to combine two often conflicting goals: community orientation and cost efficiency.

Decentralization and empowerment of local personnel are essential ingredients in community orientation. Centralization and standardization are critical components for achieving operating efficiencies.

The nagging question is: How far do you go?

Answers very from bank to bank, but a survey of super community institutions last year gave some indication of the directions being taken.

Generally, staff functions are best centralized, while functions should not be.

Loan underwriting, for example, should not be consolidated. More than half the banks in the BDO Seidman/American Banker survey followed this precept. Community knowledge is the key to quality assets; this is considered a major advantage of retaining local autonomy.

Loan operations are another story. Economies present themselves in the processing elements of a loan, rather than the very individualized underwriting function.

Pricing flexibility and customer service are other areas in which remaining local is viewed as a super community advantage. …