North Carolina's state-chartered banks have taken to investment products despite economic uncertainty and industry consolidation, according to a recent survey.
The survey by the office of the state commissioner of banks, showed that 40 state-chartered banks offered securities and mutual funds to their customers in 1993, up from 31 banks a year earlier.
The increase is striking, given the wave of consolidation that has swept North Carolina's banks in recent years.
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The number of state-chartered banks fell from 63 at the end of 1992 to 57 in 1993. And in the first five and a half months of 1994, the ranks have shrunk further, to 55, according to William T. Graham, North Carolina's commissioner of banks.
"With fewer banks, we still had a 25% increase" in the number offering investment services, Mr. Graham said. "I'd say that was big."
Counseling Services on Rise
Banks offering financial counseling services also rose, to 14 in 1993 from nine the year before.
Traditional trust departments got a boost as well during the same period. Eighteen banks offered such services as of yearend 1993, up from 15 in 1992.
The North Carolina banking department has been conducting an annual survey since 1987 to develop a clear picture of the services offered by banks.
"We started this back when there was so much controversy about these types of products," Mr. Graham said.
The survey was continued in subsequent years primarily out of curiosity about investment products, he said.
Next year's survey will include several new categories, including a breakdown of banks that only sell mutual funds as opposed to those that sell individual securities as well.
North Carolina's state-chartered banks have traditionally been allowed to offer a variety of services, Mr. Graham said, although many critics were doubtful that banks could manage them profitably and effectively.
"We wanted to show these people that banks could offer these services and offer them successfully," Mr. Graham said.
Most of the 71 commercial banks that operate in North Carolina - including those with national bank charters - now offer investment products either through an investment products marketer or a broker-dealer subsidiary, but that wasn't always the case, Mr. Graham said.
"Until 1987 I thought everyone was getting into the brokerage business, but then no one did for three years," he said.
The trend has "picked up" considerably, Mr. Graham said. He expects that all but a few of the state-chartered banks will offer investment products in the next few years.
"We got a couple of old-line banks that say, 'We know we're going to get sued no matter how much disclosure we give them, so we're not going to get into that,'" he said.
