Whenever yet another institution announces a major automated teller machine deal, my firm receives a flurry of calls from concerned bankers who ask, "How many ATMs are enough? How many are too many? How soon will the ATM market be saturated?"

To help retail banking executives grapple with such questions, we have devised a benchmark, which I like to call the Kellogg Quotient, to measure ATM coverage and convenience. Like the efficiency ratio and other metrics that normalize for institution size, the measurement enables quick cross- industry comparisons.

The benchmark measures the number of machines deployed or planned by an organization per $100 million of assets. When the data are gathered and analyzed, the results create a new perspective on the relative coverage of ATM deployers.

On average, the top 100 banks offer their customers 2.4 ATMs per $100 million of assets. But the range is wide.

Leading all institutions by a wide margin is Banc One Corp., with a quotient of 9.1. But Banc One's leading position is recent. In fact, only about half of its planned 10,500 machines are installed.

Before Banc One's recent ATM announcements, Kansas City, Mo.-based UMB Financial topped the list, with a quotient of 7.0 (based on assets of $6.5 billion and 455 ATMs). Other well-recognized ATM powerhouses-Wells Fargo & Co. and U.S. Bancorp also make the top 10.

But when we dig more deeply into the data, we find some big surprises. For instance, banks with assets of less than $10 billion dominate the top 10 list. They include Keystone Financial of Harrisburg, Pa.; Star Banc Corp. of Cincinnati; First Commerce Corp. of New Orleans; Zions Banc Corp. of Salt Lake City; and Centura Bank of Rocky Mount, N.C.

Last among the top 10 is the 92d-largest U.S. commercial bank, $1.2 billion National Penn Bank of Boyertown, Pa. Though National Penn owns only 50 ATMs, those machines give it a quotient of 4.2.

Some large retail banks lag far behind their peers in ATM deployments. For instance, ranking 26th, 38th, and 59th respectively are three of the country's largest retail banks-BankAmerica Corp., NationsBank Corp., and First Union Corp.

With more than 7,600 machines, Bank of America until recently was the No. 1 bank deployer of ATMs. But Bank of America offers its customers only 3.0 ATMs per $100 million.

NationsBank, after its merger with Barnett Banks Inc., would be the third-largest institution in the country, adding 1,000 units to its current 6,000. However, its ATM quotient would total only 2.4.

And First Union would lag far behind its national peers in ATM deployment even after buying CoreStates Financial Corp. With a combined ATM base of 3,600, First Union would offer its customers only 1.8 ATMs per $100 million of assets.

Though many community bankers express concern about competing with larger banks for consumers, community bankers are more than competitive in terms of ATM deployments. With an average quotient of 4.1, institutions with less than $1 billion of assets actually offer their customers more ATMs than larger institutions-a full 70% more.

In turn, institutions with assets between $1 billion and $25 billion support ATM bases with an average quotient of 2.5 to 2.6. In stark contrast, superregional banks and megabanks lag considerably behind the average ATM quotient of 2.0.

This year Banc One stunned the industry by revealing its intention to operate a network of 20,000 ATMs. Since then it has announced agreements with such retail partners as Mailboxes Etc., Sears, Rite Aid, Kmart, Dairy Mart, BP Oil, and Diamond Shamrock, in deals that add up to about 10,500 ATMs.

Banc One already has an ATM quotient of 9.1, highest in the country among the nation's largest 100 institutions. But if Banc One achieves its goal of 20,000 units and does not grow in asset size, its quotient will soar to 17.3, a full eight times higher than the nine other largest institutions with retail banking operations.

Does our benchmark tell a complete story of ATM convenience? Of course not. Just as returns on assets and efficiency ratios cannot possibly reveal all there is to be known about profitability and operating expenses, the quotient requires further analysis to form helpful conclusions.

For example, some institutions (notably Banc One and U.S. Bancorp) deploy ATMs that do not carry the bank's name and cannot be used by the bank's customers without incurring surcharges.

Therefore, while the quotient may indeed reflect these institutions' ATM coverage, it does not fully reflect the relative convenience and value the banks offer their customers.

By contrast, most institutions today deploy branded ATMs, betting on the importance of increased visibility and customer convenience, whether or not these factors are explicitly measured.

In the end, the "right" number of ATMs resides within the complexities of each institution's retail banking strategy. Our quotient, however, can help institutions look outward to their peers and competitors when positioning for consumer convenience.

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