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Special
publisher's profile: Banking
Virginia's top banking
officials on the economy, the banking industry and doing
business in Virginia.
The major banks in Virginia
are a driving force in the state’s economy and
a major influence on the regions they serve. We recently
interviewed four top banking officials in Virginia -
James C. Cherry (Wachovia, N.A.); G.S. "Sandy"
Fitz-Hugh (Virginia Bank of America); C.T. Hill
(SunTrust Banks); Barry Fitzpatrick (First
Virginia Bank); to find out their views on the economy,
technology and the banking industry.
Community
banks have seen the merger woes of the big banks as
an opportunity. They have swept in with advertising
campaigns and new services in an effort to try and snare
customers. How have you addressed this?
James C. Cherry (CEO, Mid-Atlantic
Bank, Wachovia, N.A.): Well, there may be some who
"bite" on that message about a bank being
local, but I am not sure exactly what local means, or
how we are different from that. All our people live
and work here. We contribute to the community and in
fact, if you look at how banks contribute to their communities,
if you talk to economic developers or the local Chambers,
you'll find that larger banks are by far the greater
contributors. And it's not just because of their size
or capabilities, but it seems they have a greater level
of interest. Maybe it's just because they can afford
to do more. If local means living locally, involved
locally and contributing locally, then we're all local
banks (referring to Wachovia, Bank of America, BB&T
and Sun Trust).
The way we compete is on
service, and on products and capabilities. On the service
side, there is a perception that community banks can
provide better service. Typically, the truth is they
can provide very good service but it is on a much more
limited product array. An array of products and capabilities
that is much less complicated. So if all you are providing
is one simple product it is easier to have the perception
of providing better service than it is if you have a
myriad of products that have features and options that
make them more complicated. So I would say we compete
on services and we compete on products and capabilities
that can be tailored individually to meet specific needs.
Barry Fitzpatrick (Chairman,
President, CEO, First Virginia Bank, N.A.): Every
change in the marketplace presents the opportunity to
win or lose business. Like many other banks, First Virginia
has benefited in communities where mergers were accomplished
with perhaps too little emphasis on the importance of
change and its impact on the community. But this is
not a big bank/small bank issue, the smaller, single
community banks are not immune to the service problems
that may accompany mergers or, more likely, changes
in customer needs. And, while I agree on the advertising
emphasis of small banks, I disagree that smaller banks
offer new services. One of the major challenges faced
by small banks is that they cannot always adapt or provide
the types of products and services today's sophisticated
customers increasingly demand.
As an acquirer, First Virginia
has benefited from the strength of the organizations
we have purchased and has been able to emphasize the
attributes where the combined entity became stronger
as a result of the new partnership.
G.S. "Sandy" Fitz-Hugh,
(President, Virginia Bank of America):The smaller
local banks that are growing up, in many cases are growing
with associates that have come from other major banks.
We have seen that these banks, over a period of several
years, do well. It usually takes them two or three years
to become profitable and after a time of growth they
seem to run into a wall from the standpoint of their
revenue growth, specifically in their revenue being
able to support their operations. When they start seeing
that, that's when they look to mergers and economies
of scale, being able to merge with another bank to reduce
their overhead. And that's what we're seeing now in
Virginia.
These smaller banks need more
money for technology, product development and marketing
and they can't do that as a small independent.
I would say that a large
bank like BOA would provide a larger range of services.
Community banks, in most cases, can provide solutions
to basic banking needs but they can't cover the geographic
interest of that customer. They also can't provide the
electronic and Internet services that more sophisticated,
larger banks can provide.
C.T. Hill (Chairman, CEO, SunTrust
Banks, Inc.): We really do have a model here that
says we can deliver big bank capabilities through a
local decision model, so if you're dealing with us in
Roanoke, Virginia, we've got a team on the ground in
Roanoke that owns that customer base, that makes the
decision for the customer base, so it's much like the
touted "community bank" model with a lot more
capabilities. You'll see when a lot of these things
are going on, a lot of conversation about big bank merger
woes and that sort of thing.
Quite frankly, any time you have
one of those going on we may participate on the advantages
of those as much as a community bank. There will always
be a place for community banks and we have some pretty
strong community banks here in the Commonwealth of Virginia,
but it's not an either or situation. However, a company
our size has a much broader array of products and services
and if you can pull it off with the local delivery model,
the customer wins at the end of the day.
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