Of banks great and small

New Mexico Business Journal,  June-July, 1999  by Michael Bawaya

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New Mexico has some of the country's largest banks, but the small banks are holding their own against them

The banks are baffling for the hearts, minds and, most important, money of New Mexicans. The battle could be described as high tech versus high touch. There are the big banks, which boast of their wondrous technology and convenience. And there are the small banks, which laud their old-fashioned but equally wondrous personalized service and local ownership.

This battle line is drawn as the banking industry is changing. Customers can bank at home, at their nearest ATM or, of all places, at a bank. They can choose from a list of products and services so extensive as to be confusing. Paul Boushelle, a spokesman for the New Mexico Bankers Association and an executive vice president with First Security Bank of New Mexico, said banks have become much more competitive and price-conscious. Which is good. The technology has improved, making banking more convenient. Which is also good. There have been mergers and acquisitions, resulting in financial behemoths. This, depending on who assays these consolidations, may or may not be good. One thing that has not changed is the presence of small, community banks, several of which have come into existence in the last few years. They are proving themselves willing and able to go toe to toe with the behemoths.

Despite the disparity in sizes, the distinctions between the banks may not be as clear as their advertising campaigns suggest. "Banking is like the car business: we all have the same products," said Mike Stanford, the chairman and ceo of First State Bank. It's the "value-added" that distinguishes one from the next. That added value may take the form of getting a quick response on a loan application, spending enough time with the customer to understand his particular needs, or something as simple as knowing his name.

Indeed, a number of the small banks complement their down-home friendliness with whiz-bang technology. "We have an outstanding Internet banking service," said Bill Enloe, the ceo and chairman of Los Alamos National Bank. Enloe thinks his bank, which he said is the second largest independent bank in the state, is as technologically advanced as the big banks while charging, on average, lower fees.

Mike Warren, the president and ceo of Valley National Bank in Espanola, is able to offer advanced products and services by partnering with other financial institutions. These institutions may assist Valley National with Internet banking know-how and mortgage-loan services, or they may put up part of the capital for a loan that would otherwise exceed the bank's $2.5 million lending limit.

Enloe said small businesses have an advantage dealing with him in that they can get a fast response - in about a week, on average - to their loan requests. It takes much longer for the big banks to respond. This is a consequence of the big banks generally sending loan applications to their out-of-state credit office, where they are "scored" by a credit analyst who never laid eyes on the customer applying for the loan. It's an example of the cold, number-crunching bureaucracy that makes some cringe. "You meet the rules or you don't get the loan," said Enloe.

Bob Goodman has been on both sides of the line. He was president of Sunwest Bank (which became Nations-Bank, which then became Bank of America), and is now chairman and ceo of the new Capital Bank in Albuquerque. He said Capital is a bank where "people are kind of doted over." Customers, when they enter the lobby of the bank's sole office, are greeted by an employee who directs them to the appropriate person and offers them a beverage while they wait.

"I think it's easier to establish a one. on-one relationship in a small bank," said Goodman. When a customer applies for a loan, the application isn't sent to Phoenix or Dallas, but to Goodman's office, where the decision is made. The decision-making process, should there be a problem with the application, may include attempting to rework the loan rather than denying it. "I like this way a lot better, or I would have stayed (at Sunwest)," he said.

But Goodman admitted the big banks can offer services that Capital can't. Capital doesn't have Internet banking, though it expects to in the future. It also doesn't have ATMs; however, its customers can use any other bank's ATM up to six times a month at no charge provided the customers maintain a balance of $2,500 in their account.

"You can go to a Bank of America branch anywhere in the country and cash a check on your Bank of America account," he said. That's the kind of technological feat the big banks spend huge sums of money on. Though Goodman and several other small bankers don't doubt its impressiveness, they question its importance. But Bank of America, the county's largest bank, does not. Jean Johnson, BofA's vice president of corporate affairs, estimated her company spent half a billion dollars last year to develop new technology and another half billion to enhance existing technology. One of the benefits of these investments is a coast-to-coast network of nearly 15,000 ATMs that can be used at no charge. Another benefit is a combined checking and investment account called the Money Manager Account. The funds in this account, which the customer can write checks against, are kept in a money market mutual fund with the potential of earning a higher yield than the paltry interest rates of standard checking accounts. "We are very focused on what our customers need, want and desire," Johnson said. And should the customer need, want and desire a big loan to go with all that technology, BofA will gladly accommodate them. "The bank is so large it is virtually unlimited in the amount of credit it can extend," she said.