Banks need to prepare now if they want to survive the coming economic slowdown, industry experts warned last week.

Between now and 2001, one-third of community banks will lose more than 30% of their earnings to loan losses, predicted Edward A. Krie, director of asset/liability strategies at James Baker & Assoc. in Oklahoma City.

"The best news that will happen for community banks in this cycle has already happened," said Mr. Krie, a speaker here at the American Bankers Association's national conference for community bankers. To survive, banks "need to understand the bets they have made."

For example, banks should track the performance of all loans that were approved only after exceptions to credit or collateral policies were made, he said. Banks also ought to ensure lending standards are up to date.

"Too many boards are approving loans based on standards written years ago," Mr. Krie said.

In another session, J. Michael Woody, a consultant in Edmond, Okla., said earnings momentum has continued this long only because "bankers have been able to pull a lot of rabbits out of a lot of hats."

Many banks have stretched their loan-to-deposit ratio above 80%, and some have relied almost entirely on acquisitions to keep up the pace.

Now is the time, he warned, to ready shareholders for the end of high growth. They need to understand that even slower-growing banks, if well run, can be a good investment.

"If you can just maintain a healthy 15% return on equity, you get rich," Mr. Woody said. "Enormous wealth is generated in down times."

While keeping an eye on the future, most bankers were more focused on calming customer fears related to the year-2000 computer problem. To help, the ABA compiled a booklet with 61 tips on surviving the millennium date change.

Tip No. 51: "Hold a New Year's Eve party in your lobby and invite all your customers to come and watch the vault door open at the stroke of midnight. Just the fact that you've got the guts to extend the invitation should calm folks who are worried about it."

With technology such a hot topic, the ABA used the conference to hawk its new, for-profit subsidiary ABAecom.

At a standing-room-unavailable session Tuesday, Donald G. Ogilvie, executive vice president of the ABA, chided community bankers for resisting the Internet.

Only 200 banks with less than $1 billion of assets operate a Web site and only 20% of those are interactive, he said.

Mr. Ogilvie asked if any banker could define "bot." One man raised his hand and guessed: "The little reflectors embedded in highways?" Not exactly. Mr. Ogilvie launched into an enthusiastic explanation of software robots working behind computer screens.

ABAecom's first product is SiteCertain, an active icon that assures Internet users they have surfed to a genuine bank. Participating banks place a SiteCertain graphic on their Web sites. By clicking on the graphic, users can access detailed information on the bank, including a direct link to Federal Deposit Insurance Corp. data.

"It's a way for customers to know they have really found you on-line," said Thomas J. Greco, ABAecom's president.

Originally offered for an average $1,250 a year, Mr. Ogilvie announced the ABA has decided to provide the service for free.

Thank goodness for flip charts-computer crashes foiled several attempts to demonstrate SiteCertain. Still, to assure customers worried about fraud on the Internet, many of the bankers interviewed said they planned to sign up for the service.

What's a community bank conference without a little credit union bashing?

During a "town meeting" with the ABA's officers, music from the movie "Jaws" blared while 600 bankers wound up toy plastic gums and teeth mounted on feet. With the music pumping and the mouths jumping and clattering on the table, ABA treasurer Harley D. Bergmeyer rose to criticize the National Credit Union Administration.

"Jaws-the regulator. The NCUA," said the president and chief executive of Saline State Bank, Wilber, Neb. "The NCUA is out to help these large credit unions gobble up the competition-and that's you and me, folks."

The ABA has sued the NCUA over new rules making it easier for people to join credit unions. "The regulator, this cheerleader, in our opinion has violated the law," Mr. Bergmeyer said.

"We will sue them every step of the way," ABA president R. Scott Jones added.

The town meeting-complete with planted questions and prepared answers- covered a range of topics, including Y2K, legislation overhauling financial and bankruptcy laws, the industry's image, and farm lending.

To raise money for the ABA's political action committee, BankPac, free shots, or mulligans, were sold to competitors in the convention-staple golf tournament. Though most participants insisted they would not need them, more than 200 mulligans were sold, at $10 each.

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