After Slow Start in Texas, Banc One Aims for Visibility

One of the nation's most celebrated retail banking companies, Banc One Corp., is having a tough time working its magic in Texas.

The Columbus, Ohio-based company entered the Lone Star State amid great fanfare with its January 1990 acquisition of the 20 failed MCorp banks. Since then it has snapped up 11 more failed banks and thrifts.

Bank One Texas managed a remarkable 100% increase in consumer loans, to $3.34 billion, during the 12 months ended March 31. But according to Salomon Brothers Inc., almost all of the gain can be attributed to loan purchases, not originations.

Weak Profits

And robust profits remain elusive: The 0.67% return on average assets posted by Bank One Texas in the first quarter pales in comparison with the 1.66% return posted by the parent company.

"This is not about immediate gratification," said Alfred S. Dominick Jr., chief retail officer of Bank One Texas.

Though confident that progress is being made across a broad front, Mr. Dominick predicts it will take until 1995 for the Texas unit to gain full strength.

Bank One has been slowed by the soft Texas economy, an archaic state law forbidding home equity lending, and the challenge of building a branch delivery system virtually from scratch.

Hope for the Future

Mr. Dominick said he is convinced the borrowing appetites of Texas consumers will increase as the economy rebounds.

But the bank clearly is inhibited by the law that bars home equity lending - which Mr. Dominick describes as the single most important tool facilitating consumer installment lending. There is no indication the law will be overturned anytime soon.

Optimistic despite the slow start, Mr. Dominick is putting convenient service at the heart of his game plan. His initiatives are aimed at boosting the bank's visibility and accessibility.

When Diamond Shamrock Refining & Marketing Co. decided to put automated teller machines in its Texas gas stations, Mr. Dominick struck a deal to install and service 350 machines bearing the logo of Bank One Texas.

A separate deal with Mobil Oil Corp. enables Bank One Texas ATM cardholders to purchase gas with their cards at 550 Mobil stations in Texas and Louisiana.

In April, Bank One Texas established a phone service staffed 24 hours a day by personnel authorized to resolve account disputes and trained to sell a variety of products.

Emphasis on Service

The round-the-clock service was designed to one-up NCNB Texas National Bank, which switches its phone service from operator assisted to touch-tone access in the evenings and most of the weekend.

Bank One Texas has also expanded from 58, to 131 branch offices.

In other marketing efforts, the bank recently launched a direct-mail campaign targeting 250,000 Texas households. Concurrently, the bank unveiled a linked account incorporating checking, loan, and credit card services.

And for months, the television networks have been flooded with Bank One ads showing airplanes dropping cash over neighborhoods, and tollbooth operators handing out fistfuls of currency to motorists.

Aiming for Name Recognition

"My goal is to make our name all-pervasive in the marketplace," said Mr. Dominick.

Even more work has been going on behind the scenes. The bank created a 1,100-page underwriting and operations manual. And it has spent months training employees - especially those coming aboard from failed thrifts.

Though the first to admit that millions in revenues will not quickly follow every move, Mr. Dominick maintains the vast potential in Texas makes the bank's efforts worthwhile.

"Competition still is in transition here, and the population is growing," said Mr. Dominick.

"For now, it's enough to know our account base is growing, because that's what will get us where we want to go in our five-year plan."

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