If imitation is the sincerest form of flattery, then community banks should feel quite honored when large institutions talk about their goals.

Last month, for example, I was in the audience when T. Joseph Semrod, chief executive of $23 billion Summit Bancorp, addressed the annual CPA/bankers meeting sponsored by the New Jersey CPA Society.

Summit is the new superregional formed when the old Summit Bank merged with United Jersey Banks. These two component banks were also the result of previous merger after merger, as community banks were bought out and the number of banks left in the Garden State was cut in half.

Yet as Joe talked openly and with great warmth, you got the feeling that the first aim of his new giant is to act like the banks that were acquired used to act.

Sure, there is automation. Joe said his new call center will handle 12 million calls this year, and that 35% of new loans are originated over the phone. Even more indicative of how impersonal modern banking is becoming is the fact that 85% of the bank's calls are handled automatically with no operator assistance.

But what does Joe Semrod brag about?

*They have developed six different regions with separate presidents. Also, Summit identified 93 distinct markets, finding that customers cannot be conglomerated in a mass market. Rather, markets must be divided into lifestyle segment profiles, so that while you are on the phone with a human being - when you eventually get to one - they can make exceptions to rules and charges.

As Joe described it: "A customer is on the phone complaining about a charge, and the service rep is saying 'You have to realize how expensive our operations are; this is why we cannot remove the $12 charge.' But simultaneously, the rep pulls up the fact that the bank makes $13,000 on the account per year, so she quickly adds 'But in your case we will remove the charge.'"

O.K., Joe concludes, "so we only make $12,988 on the account this year."

*Mr. Semrod further revealed that Summit is building supermarket branches that cost $200,000 against the $1 million a regular branch would cost. The best part, he boasts, is people come into the supermarket 2.5 times a week.

But look back. Much of what he brags about, community banks do now.

They know how their customers differ and what services each needs.

They know whose account is profitable and whose is a drag on the bottom line.

They encourage people to come in and see human tellers and branch people instead of thinking of their bank as an "800" number and a recorded voice saying "push one."

And when asked what advantages the community bank has over the giant, Joe responds "They stress private banking, you can talk to the president, and they are the best run banks in the country."

Compare that to Mr. Semrod, a true people person who will meet you once and remember your name forever. (Honestly.) Yet his bank is now so big that even as he greets the new enlarged staff in a welcoming reception, it has to be by TV screen in several locations.

Joe Semrod admits that with facilities managers and other servicers, the community bank can get about the same technology superregionals can get. It is staff that makes the difference. He revealed that when he and Bob Cox, CEO of the former Summit Bank, met to plan the merger (meetings that took place in Cox's home to avoid rumors and insider trading), they spent 80% of their time deciding which people to keep.

It is with irony that I recall the words from Ken Fisher, another president of UJB, who had come from a small bank that UJB had acquired more than two decades ago. "When I had my own bank, I knew whose balances were good and whose were not and whom to lend to and whom to reject. Now millions of dollars of computer equipment later, we are so automated we can tell whom to favor and whom to reject. What have we gained?"

And hearing Semrod speak now, we have to conclude that things aren't that different from what they were decades ago, when the urge to merge community banks into larger companies was just getting started.

Mr. Nadler is a contributing editor of the American Banker and professor of finance at Rutgers University Graduate School of Management.

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