Like other banks, Whitney Holding Corp. in New Orleans had its fair share of bad real estate loans during the last recession.

And like many old-line commercial lenders, it's been reinventing itself to have a much stronger focus on consumer banking.

But few have had to manage as delicate a balancing act - the New Orleans bank wanted to reach out to the mass market without sacrificing its status as an icon in the Big Easy's business community for more than a century.

Leading the charge has been William L. Marks, a veteran of Amsouth Bancorp. and Wachovia Corp., who was brought in as chief executive six years ago.

"We were confident that we could make the changes necessary to solve our problems," said Mr. Marks. "But we didn't want to change that image that the Whitney had that made customers come, and made them feel good once they got here."

The transformation under way at Whitney underscores the vast changes that have swept the industry in the last two decades. It may also signal the final breath of the old-fashioned commercial bank that Whitney exemplified - clubby, a bit stodgy, the kind of place where business loans were clinched with a handshake.

Mr. Marks' first order of business was cleaning up the balance sheet and introducing stricter credit standards. By 1992, after two years of losses, Whitney returned to profitability. That permitted the pursuit of more ambitious goals - building relationships with consumers, upgrading its technology, and, in the last year, dipping into the acquisition market.

What's most striking, perhaps, is that the $3.1 billion-asset bank has been doing all this without the massive layoffs and cost-cutting that were part-and-parcel of other banks' "reengineering" efforts.

"We wanted to end up with everything fixed, but with the people that our customers knew, and that's what we were able to do," said Mr. Marks. "That's the thing we're most proud of."

But bringing about that kind of change - both cultural and organizational - wasn't easy. "Attitudes and culture are the hardest thing in the world to change," said Mr. Marks, a history buff who keeps a portrait of Gen. Robert E. Lee above the fireplace in his office. (Mr. Marks admires the Confederate general for his character and leadership abilities. "It's not that old South thing at all," he said.)

When Mr. Marks was hired, the bank lacked a management structure with clear lines of authority and well-defined job descriptions. Credit controls were inadequate. Facilities, including the back office, were outdated. And the staff lacked expertise in retail banking because of Whitney's historical focus on corporate banking.

"Nothing much changed from, say, 1958 to the early '90s," said Mr. Marks. "It was almost like we just decided we weren't going to participate in change of any kind. And everybody was content to do it that way."

But the bank was unwilling to let go its commercial lenders, who had longstanding relationships with business customers. While the staff may have been making loans with flawed underwriting standards, they did so "with 130% effort," said Mr. Marks.

Those bankers, he said, were able to make the switch toward gathering more documentation and information from borrowers.

As a result, the commercial lending staff is largely unchanged from the dark days of the early 1990s. "I probably couldn't count on my hand the people who just did not want to make the change," said Mr. Marks. "By and large, we've got everybody here today, other than those who got to retirement age, that we had back in 1990."

There was also the risk of offending customers who liked the old way of doing business. "How do you place this extra burden on customers and still have them like doing business with you as they have in the past?" asked Mr. Marks. "We found a way in almost every case to do that. So we've had virtually no slippage in terms of our customer base."

But building the retail bank - virtually from scratch - proved to be more challenging. While Whitney had made the occasional consumer loan, it typically turned interested borrowers away. The bank didn't offer a credit card and, as recently as 1990, didn't operate a single automated teller machine.

"We literally did not know how" to make consumer installment loans, recalled Mr. Marks. "It's just not something you're born knowing how to do."

The bank launched a major training program and hired people with retail banking experience at all levels.

Indeed, while Whitney's asset base is virtually unchanged from 1990, the number of employees has grown from about 1,300 to 1,600 - somewhat unusual for a bank on the mend.

While the bank has also expanded the range of accounts and other retail products to be more competitive, Mr. Marks concedes more work remains to be done. "Both retail and trust take a while to build up," said Mr. Marks. "While we've made strides ... we still have a very low percentage as a mix of our business in retail."

Consumer lending, including mortgages and credit cards, represents about one-fifth of the bank's portfolio. Overall loans grew 36% in 1995.

Whitney has had to catch up in other areas as well. This year, the bank has budgeted $49 million for capital projects, nearly a third of it for technology.

That includes $9 million for a new operations center on the outskirts of New Orleans. Back-office tasks are now handled on eight floors of the bank's amalgam of adjacent buildings on a downtown block.

"We almost give our checks vertigo, we move them up and down so many times in an evening," said Rodney D. Chard, the senior vice president of operations and technology who was hired last fall.

Executives say the 100,000-square-foot facility, expected to open by Labor Day, is emblematic of the bank's commitment to catching up with technology.

"I've built data centers before," said Mr. Chard, who has worked for EDS Management Consulting Services, the Bank of Montreal, and Canadian Imperial Bank of Commerce. "It has a tremendous psychological impact on everyone in the operation."

The bank is currently negotiating with an unnamed vendor to buy a new platform automation system for its customer service representatives. The bank the system to be installed by the middle of 1997.

Other initiatives include new trust and wire transfer systems. That's on top of $12 million spent in 1991 to convert Alltel Information Services Inc.'s core banking software. Whitney invested between $30 million and $40 million on systems during the last five years, said Mr. Marks - far more than it ever had in the past. "We were well behind the industry," he said.

These steps are expected to make the bank more efficient. The goal is to reduce the efficiency ratio, or ratio of noninterest expense per dollar of revenue, from about 67% now to 57% by mid-1997.

The emerging information architecture is also designed to ease the process of bringing acquisitions into the fold. Since 1993, Whitney has bought banks in Baton Rouge and Mobile, Alabama. In January, it began negotiations to buy a community bank in Iberia Parish, Louisiana.

Mr. Marks said Whitney is looking for other banks - with $250 million to $500 million in assets - along the Gulf Coast from Louisiana to the Florida panhandle. "If we have one or two more, you know it's conceivable we could grow 30% in 1996 and early 1997," said Mr. Marks. "That's pretty hefty growth."

But the improving Louisiana economy may also lure suitors for Whitney from out of state. Banc One already entered Louisiana last year with its purchase of Premier Bancorp in Baton Rouge. Analysts say one of the big three New Orleans banks - Whitney, Hibernia Corp., or First Commerce Corp. - are likely targets.

But Whitney, to quote Gen. Lee, isn't ready to "strike the tent."

"That's not part of our strategy at all," said Mr. Marks. "Our strategy is all geared toward being in business and being successful."

And is he worried about Banc One or another superregional player buying up a New Orleans competitor?

"We just count on that, we're not intimidated by it," said Mr. Marks. "If we can't beat a Banc One in our market then maybe we don't need to be around."

"But I think we got an excellent chance to survive here," he added.

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