Potholes of Reform Plan Mapped

American Banker: Will small banks be hurt by the banking bill? James Culberson: Not if we get "too big to fail" solved. That's the critical issue.

AB: Are you losing depositors to big banks as a result of the policy? JC: Well, yeah. I think so. It's hard to put a finger on it. We've always had some people who will spread their money around with the $100,000 limit. The more publicity there is about "move your money." ... Time magazine had an article that the best thing to do is to move it to banks that are too big to fail. I think that's a critical issue.

AB: Did you see an impact as a result of the article? JC: No. Not that I can tell. You've got money moving in and out all the time. Unless you are tracking each account daily and know why it moves, you wouldn't notice.

AB: Have customers ever told you that they are moving because of "too big to fail"? JC: Yes, some very loyal customers of us have come and said they are splitting up their money and moving more than I would like to see to Wachovia, for example. It's a natural thing for people to do. I hate it. I think they're wrong.

I have one customer with a different kind of insurance. He has a lot of money with us, and he says if anything happens to the bank, he's coming after me with a gun! That's pretty good insurance. I think about him all the time.

AB: Aren't you afraid that the proposal to allow interstate banking will let big banks into your backyard? JC: I compete now with Wachovia, NCNB, First Union. Citicorp is already in the state through their credit cards. Wachovia has an office right across the street from us.

AB: How do you compete? JC: We share many of the same customers. They have dual accounts. We're good, fierce competitors. They make a deal, we make a deal. They steal our customers, we steal their customers. It's just like any other situation.

AB: Do you expect your bank to be bought by a bigger bank? JC: Our strategy is not to be. We think there's an important place for a community bank. Our board doesn't want to sell. I don't think our community wants us to sell. Some of our shareholders, if the multiple was right, might be tempted to sell; but the bloom is off that rose.

James M. Culberson Jr., president of the $200 million-asset First National Bank and Trust Company, Asheboro, N.C., is chairman of the American Bankers Association Community Bankers Council. He stopped by our Washington bureau recently to talk about the proposed overhaul of the banking industry.

PHOTO : James M. Culberson Jr., First National Bank of Asheboro, N.C.

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