After more than five months of trying to undo the damage wrought by rapid expansion, weak internal controls, and a risky investment portfolio, Brian M. Hartline is trying to return $1.5 billion-asset Main Street Bancorp of Reading, Pa., to profitability by cross-selling cash management, trust, and other services to established clients.

"We don't need to expand, we don't need to grow, we don't need to keep conquering new territories to get new customers," said Mr. Hartline, who was chief financial officer of USABancshares.com in Philadelphia before becoming Main Street's president and chief executive last August. "We've got our own customers here; we just need to start selling those services."

Weeks after the company reported a 2000 loss of $2.9 million, Mr. Hartline, 36, told investors at a conference in Philadelphia that this year will be different: He predicted that a focus on middle-market commercial customers will produce net income of about $10 million.

"It's a sort of gold mine within our own franchise," he said in an interview after his presentation, which also touted a newly branded consumer credit card.

While a renewed emphasis on sales could boost earnings, cross-selling is no panacea for Main Street or any other bank, said Bob Kafafian, president of consulting services at Tucker Anthony Sutro Capital Markets in Lancaster, Pa.

"They need to do it smartly, and they do it smartly by understanding the relative profitability of lines of business, of products, and their customers," Mr. Kafafian said, speaking of banks in general.

But Richard D. Weiss, an analyst at Janney Montgomery Scott LLC in Philadelphia, said cross-selling is a "great idea" given Main Street's position in the market.

"If you look at its competitors, like Mellon and PNC, they've kind of lost interest in consumer banking; Sovereign has its plate full; and First Union … has lost focus," he said. "There is an opportunity to do it."

Despite his enthusiasm for the strategy, Mr. Weiss said Main Street's turnaround will not happen overnight. "It's not going to be six months or a year - it may be two or three years."

Main Street's shift follows a months-long restructuring of its investment portfolio and management team. Nearly half of last year's $15.6 million of charges came from the sale of securities in its bond portfolio to reduce interest rate risk. The rest of the charges covered the cost of closing Granite Mortgage Corp., severance payments, and additions to loan-loss reserves.

Many of the events and policies that hurt earnings were set in motion before Mr. Hartline arrived. He succeeded Nelson R. Oswald, who was dismissed in April. Mr. Oswald, who co-founded the company in 1987, had pushed for a vast expansion, including buying Granite Mortgage, opening 21 branches in 1999 alone, and nearly doubling, to 45, the branch count in southeastern Pennsylvania and New Jersey.

The company closed or sold three branches in the fourth quarter and plans to unload at least two more this year. But overhead expenses for the branches has the company's efficiency ratio at 72%, well above the industry average.

A month before Mr. Hartline was named CEO, Main Street reached agreements with regulators to address weak internal controls, agreements that led to Mr. Hartline's replacing four of the six senior executives.


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