Daniel R. Smith's corporate and legislative focus can be summed up in two words: New products. His prospects can be summed up in one: Tough.

As he becomes president-elect of the American Bankers Association this week, Mr. Smith formally takes up the industry cause of gaining new powers. The quest comes at a time when the chairman and chief executive of First of America Bank Corp. is scurrying to boost fee income at his own bank.

Mr. Smith has his work cut out in both endeavors.

In the Public Eye

Federal lawmakers' skittishness about expanding the bank charter is well known. And Mr. Smith has fallen behind in developing service products needed to bolster First of America's insulation from interest rate changes and slack loan demand.

The convergence of the two issues lit a fire under the executive. At First of America's 655 branches and the banking industry's 50,000 branches, "What we need most is new products," he says.

The Kalamazoo, Mich., native is at the start of a three-year cycle in which he will be a highly visible spokesman, in the first year as the ABA's president-elect; in the second year as president; in the third as immediate past president.

And what is his qualification to speak out on legislative issues? His former strategy at First of America personifies the danger of abiding by lawmaker's constrictive vision of what a bank should be.

In the 20 years Mr. Smith spent building his Kalamazoo-based company from a $300 million-asset community bank to a superregional controlling $20 billion in assets, he concentrated on being an all-star lender.

And he succeeded: The company's loan quality has long been exemplary.

But then the hammers started dropping. First came a recession, which flattened loan demand. Then, Mr. Smith realized that lending might be a slack business for much of the '90s. To his regret, Mr. Smith found himself short of the fee-based businesses needed to sustain profitability.

High Price of Diversifying

So urgent was the need to diversify that Mr. Smith paid rich, dilutive premiums just to get his arms around Champion Federal Savings and Loan Association and its mortgage operations, and Security Bancorp and its large credit card portfolio. And yet he still lags much of the industry in fee income.

Among Mr. Smith's legislative priorities are gaining authority to underwrite insurance and mutual funds and to offer real estate brokerage. The banker also is intent on slashing the growing maze of regulations.

Winning the cooperation of Congress still appears a rocky road, Mr. Smith said, because of the adversarial views of depository institutions that sprang up during the thrift crisis.

"The House Banking Committee still doesn't act like there's a difference between thrifts and banks," he said.

Distancing himself from the fast-growing superregionals stumping for interstate branching privileges, Mr. Smith says he is in no hurry to merge the 27 bank charters owned by First of America.

He says operating discrete units fosters accountability and team spirit. And he adamantly opposes trading off insurance underwriting powers for interstate branching privileges.

No Interstate Tradeoff

Given the executive's own predicament, it seems easy to understand his resolve in saying that neither he nor the ABA are prepared to surrender any potential new banking powers in exchange for interstate branching.

At the same time, Mr. Smith does not believe complete unanimity among bankers is necessary in order for Congress to take constructive action.

"It's awfully easy for congressmen to say: |Come back when you can speak with a common voice," but it's a cop-out," Mr. Smith said, "and it's never going to happen."

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