Once upon a time, not many years ago, there lived a bright, forward- thinking state community bankers association executive who had a bright, forward-thinking executive committee.

They had a dilemma: "How can we fight against the large banks from the major cities who are coming into our state and competing head-to- head against our banks in many locations with their efficiency and new services and with their ability to serve their customers equally well at any branch they own?"

So the bankers group developed a plan.

"First, let's have a common logo that all banks that are members of our association can display on their buildings and all promotions. In this way everyone in the state will know that if they deposit with one member bank, they can use the services of all members throughout the state.

"The technology is all there. And we can go further than providing the geographical convenience of the automated teller machine. When a person who uses one member bank comes into another in a different city, he will be treated as well as a local depositor will in the handling of any special requests."

"Next, let's band together to gain the efficiencies and new services that larger banks offer in our state.

"We can develop coordinated buying, share the costs of specialists who can help our banks become more efficient, and even can share advertising programs. This by itself can help solve the problems of having to advertise on television or in newspapers that cover a far broader range than we serve, so that much of our advertising dollars are wasted. The ads will tell of what the state's independent bankers are doing and will stress the message, 'Look for a bank with our logo-there are plenty of them.'"

Well, the association's staff was pretty happy with what it had conceived. But when the plan was presented to the board, it was resoundingly rejected.

Asked why, the typical community bank chief executive officer responded:

"The big New York and Charlotte banks aren't my competition; it's the local bank across the street that I worry about. I don't want them knowing my business, and I don't want the public to feel they are as good as I am."

So the community banks continued to curse the money-center and superregionals, the nonbanks edging their way into the payments system, and the money market mutual funds that were draining their deposit balances. They lived, somewhat unhappily, ever after-or until now, at least.

What can observers of community banking conclude from this true story?

First, there is much truth in the old adage: "Lord, protect me from my friends. My enemies I can handle myself."

Yet, you can't help but sympathize with the community bankers who objected to the plan. For today many of them are earning far greater returns-on both assets and capital-than their larger competitors. And they realize that when the bank across the street is acquired by an interloper, many depositors and borrowers often shift to the local independent bank.

But this was a sensible plan. Sure, there were negatives, including the loss of individuality. But look at the positive side: being able to offer convenience and service while improving efficiency.

The board's decision typifies the inertia that has left so many other companies and industries unprepared for the change that has swept into our dynamic and continuously renewing economy.

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