Despite consolidation in the industry, attendance at the 18th annual National Conference for Community Bankers here matched last year's, as 1,500 people sought an edge in the struggle for survival.

"The endangered species is community banking," former Federal Deposit Insurance Corp. Chairman L. William Seidman told a packed session titled "Is Your Bank Prepared to Compete?"

Bankers at the conference, which was co-sponsored by the American Bankers Association and the Bank Marketing Association, for the most part said they consider themselves survivors of the merger craze, but that mania may not be over yet.

Gazing into his crystal ball, Mr. Seidman predicted the consolidation wave won't crest until 2002 when there will be roughly 4,500 banking companies. "We still don't have a true national bank, one that stretches from coast to coast," he said, but he quickly added that merger activity will "probably go too far before it stops."

Mr. Seidman advised bankers to become better marketers, to get out of the bank and drum up business. "Is your bank known as the best at something?" he asked.

The new business bankers bring in should build fee income, a key to increasing total revenues. "The top line is what distinguishes you from other banks," Mr. Seidman said.

Solid sources of fee income, he said, are insurance sales and money management.

Community banks that want to survive must enter the mergers game, he said. "Are you looking around" for targets, or "are you saying, 'There's no way I will pay three times book,'?" Mr. Seidman asked.

To compete with larger rivals, he said, community banks must use technology. "There is really nothing a big bank can do that you can't do if you buy the right technology."

**

When William T. McConnell became ABA president in October, he said he wanted to bring the industry's trade associations closer together.

Using his time before the bankers to assess his progress, the chairman and CEO of Park National Corp. announced: "We're probably worse off than we were."

Merger talks with America's Community Bankers, the thrift trade group, are a distant memory, and relations with the Independent Bankers Association of America are testy.

Mr. McConnell explained in simple terms the reasons why the ABA and ACB disagree over financial reform legislation pending in Congress. Mainly, the groups take opposite stands on a provision to eliminate the thrift charter. Mr. McConnell predicted the two groups would merge within three years.

The IBAA's position on the bill "defies all logic," Mr. McConnell said. The independent bankers have a two-prong test when deciding what position to take, he said. "If it represents change, you can be pretty certain the IBAA will oppose it," he said. The second question IBAA leaders ask is, "Where does the ABA stand?" Mr. McConnell said. "If the ABA wants to go north, the IBAA wants to go south."

Kenneth A. Guenther, IBAA executive vice president, wasn't surprised by Mr. McConnell's sharp comments, and he took his own shot.

"It's nothing new," he said. "We fortunately don't have to balance what NationsBank wants when we're establishing our legislative position."

Mr. Guenther said the IBAA opposes legislation that would shift market share away from its community bank members.

"It's not about products and services, it's about common ownership," Mr. Guenther said. "It's about the largest banks buying the largest insurance firms-and Mr. McConnell knows that."

***

The keynote speaker Monday was Marriott Lodging executive Roger Dow who recounted how the hotel company was saved from the brink of bankruptcy by making every customer feel special.

"It's not customer service" banks must foster to survive, Mr. Dow said; "it's customer enthusiasm." He pointed to motorcycle maker Harley Davidson as an example of a company with enthusiastic customers. "Can you imagine a customer tattooing your bank's logo on his body?"

The author of "Turned On," Mr. Dow warned banks against charging too many fees. If the bank is adding value, "charge like hell for it," he said. But hotels learned the hard way that charging 75 cents for an 800 call was infuriating customers.

***

A community banker in Minden, Neb., before joining the FDIC, acting Chairman Andrew C. "Skip" Hove Jr. got a standing ovation before and after he spoke.

Mr. Hove warned the bankers about the future. "You don't need a building to be a bank anymore," he said. Mr. Hove noted that 120 banks are doing transactions on the Internet today, and he predicted 500 would be doing so by 2000.

Even a bigger threat, Mr. Hove said, are the insurers chartering thrifts. The thrift charter has better powers and fewer operating restrictions, he said. State Farm Mutual Automobile Insurance Co. wants to charter a thrift and sell banking products through its 17,000 agents, Mr. Hove said. "It will be a bank built out of flesh and blood, not brick and mortar."

These nonbanks "will have a great competitive advantage" over community banks, Mr. Hove said. He prodded the bankers to find a way to gain the same flexibility rather than fighting the charter applications. "A moratorium opposing this is not the way to go," he said.

***

Addressing the concerns voiced here by many of its members, the ABA used the conference to announce a series of programs it will offer to help banks with year-2000 computer problems.

The trade group said it is planning workbooks and two conferences among its year-2000 education programs. The ABA also plans monthly telephone seminars for the next two years to discuss year-2000 issues.

"This is a business problem that affects all institutions," said Donald G. Ogilvie, ABA's executive vice president. "Fortunately, awareness on this issue is very high. We are responding to the desire for education and detailed instruction that many bankers seek."

The year 2000 was already on the minds of many bankers at the conference. They debated the merits of software vendor guarantees to fix problems in time and brainstormed on the easiest way to bring down their networks to run tests.

"We are progressing, but there is a lot of work to be done," said W. Page Ogden, president and chief executive officer of Britton & Koontz First National Bank, Natchez, Miss. "The worst thing we can do is not be sensible. It is a matter of starting now to make sure the testing gets done."

***

The whole nation is abuzz with talk of Monica Lewinsky and El Nino, and this conference was no exception.

Rumors circulated at state receptions and in the vendor hall about East Coast bankers who may have shared a flight west with Ms. Lewinsky. The former White House intern who reportedly has said she had a sexual relationship with President Clinton flew to nearby Los Angeles this week to visit her father.

And though Ms. Lewinsky was nowhere to be found, El Nino did make its presence felt-just in time for Tuesday's golf tournament.

The Palm Springs region-which averages only nine inches of rain per year-was hit with a rare February storm that dumped more than an inch of rain. But many chose to play anyway.

There was one casualty besides golf scores. George L. Welch, director of Cambridge Bank, Lake Zurich, Ill., fell and broke his wrist coming off the ninth hole during the rain-shortened tournament.

"The problem is, these courses aren't designed for rainy weather," Mr. Welch said after returning from the hospital with his left wrist in a cast. "There are no steps to take you down the hill from the green back to the cart path."

Mr. Welch said it was a clean break and that he could be back on the links in as few as 10 weeks. His fellow golfers presented him with a "purple heart" award at the reception after the tournament.

Next year's conference is scheduled for Feb. 21-24 in Orlando.

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