Christopher R. Jennings knows that smaller regional banks are extremely popular takeover targets these days.

But the chairman and chief executive of Dauphin Deposit Corp. said he and the board of directors are not ready to throw up their hands and put the $5 billion-asset bank up for sale.

Instead, Mr. Jennings quotes from the 1970 Oscar-winner "Patton," in which George C. Scott, playing the title role, says: "All my life, I've wanted to lead good men into desperate battle, and now I'm going to do it."

If the pronouns are made plural, said Mr. Jennings, the general's statement reflects the sentiments of the board and top management: that the Harrisburg-based bank should fight to remain alive in a consolidating industry.

Mr. Jennings took the top job at the beginning of this year when his predecessor, William J. King, retired. Through much of 1994, Mr. Jennings, then president and chief operating officer, began to prepare for the job, and the bank's future, by working with other top executives on a strategic plan that involves a major management reorganization, boosting the loan-to- earning assets ratio, and deploying more sophisticated technology.

"We've really committed a lot of energy and emotion to putting (the plan) in place," said Mr. Jennings. "If it's successful, we're going to create a lot of value for our shareholders. If the industry and the environment evolve so fast that the other thing (a sale) becomes necessary, we will have a much more valuable company. . . . We believe there is not a lot of downside to our shareholders" in pursuing this strategy.

Dauphin is entering the battle a strong, disciplined soldier. The central Pennsylvania bank boasts 23 consecutive years of earnings-per share-growth, an efficiency ratio below that of its super community bank peers, and a strong credit culture that enabled it to escape the early 1990s virtually unscathed by the real estate losses that plagued the industry.

"They have always been a very high-quality bank," said Mary P. Quinn, an analyst with Keefe, Bruyette & Woods Inc. in New York. "But they are looking to be a little more aggressive in their marketing efforts, to be more proactive in reaching out to customers and better utilizing their branches."

Mr. Jennings emphasized that the changes at Dauphin are very different from major reengineering projects under way at larger banks like Philadelphia's CoreStates Financial Corp. At Dauphin, for example, there will be no large-scale layoffs because expense reduction is not a primary goal.

"It's hard to simultaneously empower and encourage people, and also constantly have the sword hanging over their heads," said Mr. Jennings. "You want to try to do it gently and methodically, particularly when your expenses are already at a relatively low level."

Much of what Dauphin is doing will sound familiar to bankers - the new platform automation system, a new telephone center slated to open in November, and plans to reconfigure the branch network.

The most expensive new technology is the platform automation software, from Argo Data Resources Corp, Dallas, which includes credit scoring, electronic mail, and systems to track sales and service.

Mr. Jennings said he became convinced in 1993 that such a system was necessary, and he successful made the case to Mr. King, then his boss.

But some board members, he recalled, initially balked at the expense and the strategic plan that was emerging.

"The reason it's being rolled out now is that the old man (found) $300,000 in the budget for me to get it going," said Mr. Jennings. "When we got into this process, there were a couple of board members who said, 'Who are you to criticize what has been successful for so long?' And Bill King said, 'Because I fully support him. We've got to make these changes if we want to continue to be independent.'"

Since then, with the support of the board, Mr. Jennings has put his stamp on the organization in a highly visible manner. He named the head of the bank's broker/dealer subsidiary, Robert L. Fryer Jr., to fill his shoes as president and chief operating officer.

In short, Dauphin has promoted and assembled a team of managers with broad banking, and in some cases, nonbanking experience. Pointing to his own tenure as a consultant, and Mr. Fryer's investment banking experience, Mr. Jennings said, "I think that is indicative of a board that is creative in acknowledging the changes taking place in the industry."

Dauphin has also reorganized its banking business along geographical lines. Three presidents how run the day-to-day operations of three division.

In turn, the division presidents report to two vice chairmen at the holding company level who are responsible for community banking and corporate banking. Those executives develop policies, technology strategies, training programs, and marketing plans for their line of business across the three regions.

"That structure was designed with multiple purposes," said Mr. Jennings. "One was to keep the best of the community bank decision making close to the customer, (but also) to provide the impetus and energy for change that comes from the functions."

As part of the management reorganization, Dauphin also brought in Stewart McEntee as chief marketing officer, a new position. Mr. McEntee had previously worked at Bank of Baltimore and Signet Banking Corp. There is also a new planning and implementation officer who will monitor how the bank's resources are allocated.

The new organizational chart, and the new emphasis on marketing, will support the goal of building the revenue stream, according to Mr. Jennings.

"This company's balance sheet reflects its historic success formula, which was a deposit gatherer, investment portfolio investor, a meticulous expense controller, (and) a meticulous asset quality controller." he said.

But one weakness, he said, was the bank relied on director contacts and its reputation to build business. Add to this a growing array of nonbank competitors, and it was necessary to change.

There was also a need to boost its loan portfolio to improve the balance sheet mix.

"The financial dynamics of the company are very good - with the exception of the fact that our margin is low," said Mr. Jennings. "Lending gives rise to demand deposits, as we know, and one of Dauphin's margin issues is a lower percentage of demand deposits in the funding mix by a function of about half the average of the peer group."

More generally, said Mr. Jennings, Dauphin needed to be a more sophisticated at asset/liability management. "Bob (Fryer) is an acknowledged expert, he teaches it, he has advised many banks in it," said Mr. Jennings. "We've become much more sensitive to how we priced our assets and liabilities, how we gathered them."

Changes in the branch network are under way to aid that effort. Over the next three years, Dauphin plans to consolidate some branches and replace them with new, smaller offices in better locations.

And already nine branches have been closed. "Will we move from the current 103 branches down to something less over time? Absolutely," said Mr. Jennings. "But we won't do that with a machete, we're going to do it with a scalpel - and carefully."

Dauphin also sees a need to provide greater remote banking options for customers. The bank's automatic voice-response unit currently handles more than 60,000 calls per month, ahead of projections. The capacity is now being tripled.

Dauphin also plans to expand its fleet of 94 automated teller machines "as fast as our chief financial officer will let us," according to Mr. Jennings. The bank would also like to pilot a PC-banking service for consumers in the "relatively near future."

Dauphin is also developing a customer relationship management data base, sometimes known as a "data warehouse."

"Every time we lend someone money we capture an enormous amount of information about their household - their age, their employment, etc.," said Mr. Jennings. "What we are headed for here is synthesizing that information and capturing it off-line from the host in a semi-dynamic data base."

Mr. Jennings, who started his banking career as a systems analyst and was a Coopers & Lybrand consultant before joining Dauphin as president in 1987, appears more comfortable than most bank chiefs when talking about technology.

A bank of the size of Dauphin, he believes, can afford the technology it needs to stay competitive. "Conventional wisdom says no," he observed. "But if you look at what's happening to the cost of technology, it's plummeting. And the capabilities are skyrocketing."

To assist with its retail delivery plans, Dauphin retained Mr. Jennings' former employer, Coopers & Lybrand Consulting. Another firm, Tessera, is working with the bank on the data warehouse system. And the board of directors has hired yet another consultant firm, First Manhattan Consulting Group, to independently evaluate the bank's efforts.

In Mr. Jennings' view, technology is also key to the success of Dauphin's trust unit, which has about $7 billion of assets under management.

"Technology allowed us to drive the cost, for instance, of 401(k) maintenance, down sufficiently that we're able to offer that service as a benefit to our small business customers," he said.

The trust business, a significant player in Dauphin's market, is also a solid source of fee income. The bank's other two major lines of business are a mortgage company, Eastern, which it acquired last year, and Hopper Soliday & Co., the brokerage firm.

Both businesses hold promise but are also faced with serious bank and nonbank competition. But the Hopper subsidiary presents Dauphin with unusual opportunities, and an unusual distinction for a bank.

When Dauphin bought Hopper it 1991, it became the third bank in the U.S. - after J.P. Morgan and Bankers Trust - with the power to underwrite equity and debt. While the unit recently completed its first equity issue, its underwriting activities are largely limited to municipal bonds.

Mr. Fryer, the bank president who continues to hold the top job at Hopper, said, "What we are building is in essence a tiered system" that will include discount brokerage, full-service brokerage, trust custody, and money management services. The final tier "is care and administration, which means we'll take care of everything."

Mr. Jennings can point to a lot of changes in his eight months as chief executive, the bank has not taken the acquisition route - a potentially fast way to improve the ratio of loans to earning assets.

He's not opposed to the idea but is cautious about price. "We believe that in general banks tend to overpay for acquisitions," he said. "We're not in the business of making other people's shareholders rich, we're in the business of making our shareholders rich."

Dauphin is looking for opportunities, however, in both existing and adjacent markets, areas that Mr. Jennings said he has come to like very much.

"My ex-colleagues accuse me of going completely native," he said.

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