The concept of super community banking isn't exclusive to U.S. banks. Companies such as Banamex in Mexico and Credit Agricole in France have implemented the concept.

In fact, this mode of distribution isn't unique to banks. Regional Acceptance Corp., a highly successful auto finance company, is structured as a super community bank.

The company is the brainchild of Bill Stallings Sr., who founded it 17 years ago as a focused niche play in the auto finance business. His specialty is financing used cars (90% of them of 1992-94 vintage) with reasonable average loan size ($10,500) through a network of branches whose managers' objective is to build relationships with the customers and local dealers.

This niche play has proven very effective for Regional. With a net interest margin of 15.6% as of the third quarter of 1995 and a loan yield of 21.7%, the company is doing exceptionally well.

Though delinquencies spiked due to a disastrous data processing conversion, the business fundamentals are enviable, including asset quality. The company boasts an incredible track record of delinquencies over the past 17 years that never went over 3% and projected losses under 2%.

Part of the success in underwriting, which is evidenced in super community banks nationwide, is the relationship orientation and the local community ties which improve the collectability of delinquent loans and the initial underwriting process as well.

The company's philosophy is unique among finance monoline companies. They are building relationships in a decentralized mode, making decisions locally and empowering their branch managers to make the underwriting decisions consistent with the company's stringent criteria and philosophy.

While Regional's competitors are growing by leaps and bounds, it is growing at a relatively moderate rate of 22% a year, unwilling to compromise its underwriting standards, believing that if it does, it will likely result in higher future loan losses. At the same time, management believes in the decentralized office environment and plans to accelerate its office openings to achieve low origination growth.

Credit quality does not suffer from the decentralized mode - just the opposite. While allowing local branch personnel to tailor credit decisions to their communities, Regional closely monitors the activities of their branch offices.

The monitoring includes semimonthly reviews of all loans by home office management, branch visits by office supervisors at least monthly, written reports to senior management following each visit, and more. These extensive procedures allow management to spot potential problems quickly and implement remedial action promptly.

"We only lend money on sound underwriting principles," said Mr. Stallings, who is chief executive. "We operate locally, giving our managers the ability to develop relationships with local dealers, and the caliber of people we hire is unique."

Regional invests in its branch managers much like super community banks do in their bank presidents. Since going public, Regional has hired a number of experienced employees to manage new offices and replace departing managers.

"It is my belief that we have always had very qualified managers, but going public has given us access to long-term employees of major banks," Mr. Stallings said. "These individuals bring tremendous experience with them. As we implement our 10-year plan, these new individuals will provide the nucleus for supervisors and district managers."

Regional is a tremendous success story. It provides customers with basic transportation - essential in the small southeastern towns where it does the lion's share of its business.

The car is a crucial to the borrower's livelihood. The company caters particularly to the lower-income segment of the population, including single-parent families, individuals laid off by corporate downsizing, divorced people, etc. Effective centralized collection and underwriting procedures coupled with strong local presence yielded a superior performance for Regional. Despite the recent problems with the computer conversion and delinquencies, net income has grown 20% in the first nine months of this year.

It was fascinating to see how the concept of super community banking - produce centrally, deliver locally - works so effectively across the financial sector.

Ms. Bird is chief operating officer of Roosevelt Financial Group, St. Louis.

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