If you listen to David Francisco long enough, he might just talk you out of the banking business.
"We feel that the traditional banking business that we've known in the last few years is going to turn into a pure commodity business," he says.
And "large players are going to dictate pricing on loans and deposits."
And "our margins are going to be compressed."
And "the chance of creating a superior rate of return for shareholders is slim."
Mr. Francisco is the president of Mid-Am Inc., a $2.4 billion-asset commercial bank holding company in Bowling Green, Ohio. But he doesn't quite fit the traditional mold of a community bank executive. He talks more like a businessman who happens to manage a bank.
"We want to be more than just a good bank," he said. "We want to be a great company."
A "great company," that is, along the lines of nonbanks.
For most of the past two centuries, running a community bank has accorded its managers and owners with a side benefit sufficient to sustain their interest: stature - importance in local affairs.
That's changed. Prestige alone doesn't cut it anymore; with shareholders demanding more of their executives, bankers like Mr. Francisco worry less about being big wheels in town than about keeping shareholders happy. That means looking at the bottom line.
To that end, Mr. Francisco isn't just worried about the spreads on his core deposit and lending business. Much of his thinking these days is, in fact, focused on the economics of the debt collection industry and the fat fees it promises.
In the last year Mid-Am has bought mom-and-pop debt collection companies in Arizona, Florida, Ohio, and Puerto Rico, in a bold effort to diversify away from its core banking business.
"The debt collection industry is going through its own evolution," Mr. Francisco said. "Most of these are small operations who've run up against a wall. They're mostly small, locally owned, and they're looking for ways to broaden their horizons. That's where we come in."
Mid-Am is now one of the largest debt collectors in Florida. It has contracts with many of the big credit card issuers, rounds up bum checks (for $20 a pop) for most of the state's large retailers, and collects on ambulance bills for most of Florida's municipalities.
The company also recently started specializing in medical equipment leasing, staffing the new division with 15 experts and opening an office in far-off Los Angeles. For that alone, Mr. Francisco expects to book $60 million in leases in the first year.
Mid-Am was formed in 1988 as the holding company for Mid American National Bank and Trust Co. At that time, it had $500 million in assets. Now, it has $2.4 billion, four banks, and a slew of nonbank subsidiaries and lines of business.
"We've had a lot of growth, and we've grown in every conceivable way," Mr. Francisco said. "Most of our core banking business is here in our local market, where we can compete. Most of our growth has been in other types of business."
Mr. Francisco's point is not that all community banks will have to go into bill collection to survive. But he says they will have to do something - almost anything - different than what most of them are doing today.
"I think most of those $50 million-to-$100 million small banks that are waiting for a buyer have missed the train," he said. "The big banks have lost interest in smaller acquisitions. They're going to have to survive on their own."
His prescription: Network with other banks to bring back-office economies of scale to bear on product delivery. And diversify where they can.
"Rural banks won't exactly have the NationsBanks of the world tripping all over their customers," he said. "But they will have to do what the big guys do, and just as well. Financial services is becoming very portable."
For his own bank, though, Mr. Francisco seeks salvation not with another bank but from his own bottom line. Right now, about 30% of Mid-Am's gross income is fee income. He wants to get it to 50% or more "by the time I'm out of here."
He still has some time. He's 50 years old.