Riding Birmingham's Wave of Wealth

Birmingham, Ala., wit its image as a blue-collar, smoke-stack town, seems an unlikely place for a private bank catering to the well-heeled professional. But in the past six years, First Commercial Bancshares has proved that there is a lot of business to be had in Birmingham from affluent residents.

First Commercial was a one-bank holding company in 1985 with $235 million of assets. Today it has $862 million and five bank subsidiaries.

Changes in the Region

Much of the change is attributable to Richard E. Anthony. He and some associates who at AmSouth Bank, Birmingham's largest, looked around them and saw a changing landscape.

Named for England's steel city in 1871, Birmingham retained its industrial image for more than 100 years.

But today, the University of Alabama medical center produces more jobs than the city's remaining steel mills.

Mr. Anthony saw the future. He joined executives of First Commercial, parent of First National Bank of Jasper, to start a new unit - First Commercial Bank of Birmingham.

Deposits from Professionals

Mr. Anthony is now president of the holding company and chief executive of the Birmingham bank. His primary goal at the bank is to draw deposits from the city's doctors, business executives, accountants, lawyers, and other highly paid professionals.

To be sure, Birmingham's bigger banks already had private banking departments catering to high-income individuals, but none has focused so intently on the professional class.

First Commercial "has done a good job of not only getting the personal business of these individuals, but their company business as well," said Steve Huffines, director of research for the Birmingham-based brokerage firm Sterne, Agee & Leach Inc.

The holding company uses First Commercial of Birmingham as a prime funding vehicle for commercial loans made by its other entities.

Growth Has Been Swift

Five years after opening its doors, the bank operates six offices and boasts $323.6 million in assets, despite intense competition from the larger banks, including AmSouth.

"I remember thinking in 1985 that if we could just get to $100 million in assets, we would feel like we've really accomplished something," Mr. Anthony said.

The private banking unit represents only about one-eighth of the bank's $200 million loan portfolio, Mr. Anthony said, though he expects that percentage to increase. "We think that part of the bank can grow faster than the bank as a whole," he said.

Return Is Improving

Profitability, meanwhile, is improving. In the first nine months of 1991, First Commercial of Birmingham's return on assets was 0.68% annualized, up from 0.62% in 1990.

The bank contributed $1.8 million to First Commercial Bancshares' earnings of $7.1 million last year.

Of the holding company's five banks, it shows the most potential because the Birmingham market is so large, Mr. Anthony said.

"If you've got a good group of people and a good concept, you don't have to capture a high market share," Mr. Anthony said. "Even 1% or 2% can make you a significant bank."

Marketing Budget Small

One liability of being small is that the bank's marketing budget is dwarfed by First Commercial's bigger Birmingham competitors.

With an annual budget of only a couple of hundred thousand dollars to play with, assistant vice president of marketing Gylmer F. Bicksler cannot accomplish much with television or radio ads.

Instead, Ms. Bicksler has turned to specialized print media, such as business journals, to get her message across to the target audience.

"It's hard to gain awareness in a market this size," she said.

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