Most community bankers have turned to alternative funding sources because of the bleak prospects for generating significant deposit growth in the future.
But some bankers are refusing to give up the fight to lure fresh deposits in their communities. And some of the methods they are employing might well make sense for others.
Take Page Ogden, the chief executive officer of Britton & Koontz Capital Corp., a Natchez, Miss., bank company with roots going back to the 1830s. He is now using the Internet to reach out to depositors.
Three years ago, when many Americans were first discovering the Internet, the bank decided to become an Internet service provider for residents of Natchez and the surrounding communities-a "local America Online" as Mr. Ogden put it.
Soon, Mr. Ogden was coupling the Internet service with other bank services in an effort to lure depositors. Today, the bank offers the "Ultimate Checking Account"-for $19.95 a month, a customer gets unlimited check writing, a debit card, and 30 free hours of Internet access. The Internet services include e-mail and on-line banking with Britton & Koontz.
"Essentially, the Internet access has become our toaster," he said.
Though the bank's deposit growth still trails loan demand, the bank's deposits are growing at a faster clip than many other banks in the region, thanks in part to the Internet effort.
Mr. Ogden has also turned to branch purchases to generate deposits. In January, the bank closed on the purchase of two offices from Union Planters, a bank that was scaling back a bit.
"A problem for one organization is a treasure for another," he said.
Betsy Cohen, the chief executive officer of JeffBanks, a $1.7 billion- asset bank company in Philadelphia, knows from whence Mr. Ogden speaks.
She has watched her deposit market share in the Philadelphia area jump from 1.44% to 2.10% during the past three years, thanks in part to the sale of CoreStates Financial Corp. to First Union Corp., and the resulting customer anger.
But JeffBanks, the parent of Jefferson Bank, isn't resting on its status as the largest locally owned bank company in Philadelphia.
For example, Ms. Cohen said the bank is garnering small business deposits with the help of a proprietary state-of-the-art cash management program. The new program allows small businesses to utilize a single piece of software to transfer funds, initiate wires, and do automated clearing house transfers.
Currently, core deposits at the bank are running 1 percentage point ahead of loans.
