ABA Banking Journal - November 2008 - (Page 56)

100 years between true banks and those that pass themselves off as banks, and they still want the highest rate. “If you don’t pay taxes,” said Luke, referring to credit unions, “then you can pay the highest rate.” Without a level playing field, he added, “you really have to carve yourself a niche.” Several of the others agreed with that point, although reluctantly. “I hate to say it but I think that’s what it’s going to take,” said Gurgovits. “We’ll have to be niche players.” FNB is pursuing wealth management, which, he said, is a great way to build fee income. “I’m not sure the typical customer thinks of their bank as a place to go for financial planning,” he acknowledged. “To me it’s logical, but with so much non-bank competition I’m not sure that it’s logical to them.” Given all that has transpired since Gurgovits spoke, consumers may have become less enamored with nonbanks. “I do think that this period of stress will spawn innovation,” said Anthony. “We better create more focus on fewer things that we do well, rather than trying to be spread out over so many services. We can only invest in so many areas in terms of people and technology.” Not exactly a dissenter to the niche point, Marinangel did, however, point out that FNB and Synovus are both multi-billion dollar banks. “For my bank [$275 million], we have to be somewhat involved in niche products—so we provide wealth management and have a certified financial planner—but we also have to provide all the services that you do.” Be more of a generalist, in other words. “That’s hard to do,” she added. “You have to have really good staff to keep up.” Build a profitable sideline A true niche bank might focus solely on the small business or high-net-worth segments; or, like State Street Bank, the securities processing market. Perhaps a more practical road for the majority of banks seeking to improve revenues and offset shrinking margins is to develop what you could call the “profitable sideline.” Two of the panelists had done that with some success. Gulf Coast Bank has both a nationwide problem loan workout business and a specialized factoring business, said Williams. The other banks were intrigued by both. The problem loan business, called Gulf National, a division of the bank, buys loans from banks around the country—they go right on Gulf Coast’s balance sheet. “We’ve followed the disasters around for years—in Florida, New England, Texas, California, and now Florida again. We buy them, work them 56 NOVEMBER 2008/ABA BANKING JOURNAL Subscribe at www.ababj.com http://www.ambest.com/banks http://www.ambest.com/banks http://www.ambest.com http://www.ababj.com

Table of Contents Feed for the Digital Edition of ABA Banking Journal - November 2008

ABA Banking Journal - November 2008 Contents Editor's Column Banking 2.0: Credit, Banking's Essence, Set for Rethinking Snapshot: The Few, the Proud, the Banks that Can Raise Capital Will Strong and Simple Banks Inherit the Business? Back to the Future ABA Resources ABA Chairman's Position Farm Lenders Must Take Care When Lending in Indian Country Pass the Aspirin Into the Breach Adventures Across A Century What the Future Holds, Post Crisis Paul Volcker: A Financial Legend Still Speaks Strong Ed Yingling: Weathering the Storm Dick Kovacevich: "Boring" Banking to Dynamic Financial Services Jim Culberson: Community Banking: What has Changed and What Shouldn't Walter Shipley: How a Chemical Reaction Helped to Mold Today's JPMorgan Chase William Isaac: Challenges and Opportunities Ahead for Banks A Hundred Years from Our Pages Eight Tech Innovations that Brought Banks into 21st Century Bank Cherokee: Third Generaton Marks 100th Year The First National Bank of Altavista: Railroad Gave Birth to a Town, a Hope Chest, and a Bank Rosedales Federal Savings and Loan Association: How a Friendly Game of Cards Turned into a 100-Year Mutual New Washington State Bank: Cooking Up the Next 100 Years Mailbox Banker's Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - November 2008

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