A community bank that helped revitalize Miami Beach's Art Deco district is jazzing up its product line to serve an increasingly youthful clientele.
Jefferson Bank of Florida, with $400 million in assets, has concluded that it must offer mutual funds and annuities to keep in step with the changes that have swept its community.
"The old-fashioned way of doing banking is gone forever," says Barton Goldberg, who helped organize the bank 30 years ago and is now its president. "You can't just make loans and take deposits anymore."
Next month, Mr. Goldberg plans to launch an investment sales program with marketing support from Invest Financial Corp., Tampa, Fla.
Average Age Down to 45
He expects the bank to reap about $140,000 a year in fee income this way. But more importantly, he believes the new offerings will help the bank meet the needs of its customers, whose average age has plunged to 45, from 71 a decade ago.
Young people have flocked to Miami Beach over the past five years, as an urban renewal program transformed the dilapidated strip known as South Beach into a showplace of Art Deco architecture. Boarded-up hotels have been renovated into bright pastel and neon palaces, and cafes and clubs have sprouted up everywhere.
The baby boomers on Rollerblades who now zip along beachfront paths have decidedly different financial needs and goals than the retirees who once dominated the community, Mr. Goldberg said.
Willing to Take Risks
This mostly professional crowd is interested in alternatives to deposits, and is willing to accept investment risk, he said. Also, their pressing financial goals include buying a home or financing a college education, not saving for retirement.
"I suspect that they will be the main targets of our marketing effort," said Joseph G. Wallis, a senior vice president and head trust officer at Jefferson Bank.
Although Jefferson Bank is new to mutual fund sales, it already has some investment know-how. The bank is the only one in the city with a trust department, and it is committed to seeing the division thrive.
"I don't expect that any funds will leave the trust area," Mr. Wallis said. "In fact, we hope the mutual funds will draw more in."
Natural Extension
An investment products sales program is a natural extension of Jefferson's trust business, according to Mr. Goldberg, who said the idea was to broaden the scope of the bank's offerings in order to attract new clientele while keeping its present customers happy.
"Investment products really go across lines," Mr. Goldberg said. "We would have had them anyway, but we felt now was a good time."
Bank officials made the decision to offer mutual funds and annuities in 1993 and spent the better part of a year looking for a partner before Invest was selected early this year.
"We figured we were to be in it for the long haul, so we took our time looking," Mr. Goldberg said.
The bank also considered launching its own brokerage unit, but ruled out that option early on because Mr. Goldberg wanted a partner with expertise in mutual funds
Stiff Competition
As it prepares to offer mutual funds, Jefferson Bank will be competing with some of the giants of the industry. Megabanks such as Barnett Bank and First Union have set up shop in Miami Beach to offer these very same products.
Mr. Goldberg says the key to competing against bigger players is community exposure.
"A lot of people want to do business with a bank that's involved in the community," he said. And, he added, "I probably have more recognition on the beach as a president than some branch managers at the bigger banks do."
Community banks like Jefferson can respond more quickly to local needs, and that helps when it comes to attracting and retaining customers, Mr. Goldberg said.
Hurricane Relief Effort
He noted that Jefferson Bank took part in fund-raising efforts to help victims of Hurricane Andrew after that storm devastated parts of South Florida. The bank also helped fund. high-profile construction projects such as South Pointe, a residential building in South Beach.
And Mr. Goldberg is spearheading an effort to bring a new Convention center to Miami Beach, which could attract more business to the community.
The addition of investment products is one manifestation of an effort by the bank to adapt to its customers' changing needs, Mr. Goldberg said.
For instance, the bank is printing Spanish versions of brochures and statements, bowing to the fact that the community is now 43% Hispanic.
