Mergers and takeovers will eliminate many more small bank, by the year 2000, with space-age technology fueling the consilidation, community bankers said in a recent survey.

Allen I. Olson, president of the banking group that surveyed upper Midwest bankers, said the results matched his perception of the region.

"There was nothing that made me blink my eyes and say, |Gee whiz,'" said Mr. Olson of the Independent Community Bankers of Minnesota.

For instance, 96% of respondents predicted that the number of independent community banks would decrease by the year 2000. The fact that 62% forecast a decrease of 5% to 20% suggests consolidation will be gradual, Mr. Olson said.

PCs as Small-Bank Saviors

Respondents also heralded telecommunications and data imaging as technologies that will affect community banks most positively in the next five years.

In the 1980s, "probably the personal computer saved the small financial institution," Mr. Olson said. "We're at another transition point - the next phase of the technological revolution."

About 42% of respondents described the economy with "guarded optimism," while 20% called themselves optimistic.

"It indicates that the ag recession of the '80s has been digested," Mr. Olson said, "and the flooding shock wave of '93 was not overwhelming.

Survey Highlights

"I think the survey suggests that the economy will be there to support the bank and the bank will be there to support the economy."

The survey also found:

* Competitive pressures will most influence the projected decrease in community banks, according to 46% of respondents, while 40% blamed government regulations.

* Acquiring another community bank was foreseen by two-thirds of respondents for the next five years, and 23% said they were likely to merge with a community bank, while 11% said they expect to sell.

* The greatest difference between community banks today and in the year 2000 will be increased services, 51 % of respondents said, as 29% said community banks would be larger.

* The ability to offer personalized service was the most positive influence on community bankers today, according to 56% of respondents, while 23% cited a growing economy and 20% pointed to enhanced and affordable technology.

* Capital improvements that respondents most often anticipated for the next two years included: computer software, 29%; hardware, 28%; back-office technology, 21 %; remodeling, 17%; and telecommunications, 16%.

* About 49% of respondents said they would maintain current payrolls for the next five years, while 38% said they would increase employment.

The 251 survey respondents are community banking executives from Illinois, Iowa, Michigan, Minnesota, Montana, Nebraska, North Dakota, South Dakota, and Wisconsin. The survey was done for an Independent Community Bankers of Minnesota exposition scheduled May 18-19 in Minneapolis.

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