Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, September 19, 1993 TAG: 9309160018
SECTION: BUSINESS PAGE: C-1 EDITION: METRO
SOURCE: Mag Poff
DATELINE: LENGTH: Long
How is a small community bank in Southwest Virginia to compete with the giants?
Ferguson, Andrews & Associates Inc. came up with an answer. Since last February, the Roanoke investment company formed a program for community banks, which now can offer their customers mutual funds, stocks, bonds, annuities or anything else on the market.
People like doing business at a community bank, said Leyton Harding, who is executive vice president of one, First Bank and Trust at Abingdon.
Customers believe the bank knows and trusts them and can meet their traditional banking needs.
But, Harding added, small-town customers demand more sophisticated products in today's low-rate environment.
"When people walk through our door, we need to be able to offer them products of interest to them," he said.
The Ferguson Andrews program, Harding said, blends the best of community banking with the professionalism of a larger organization. Both share the same basic philosophy, he said.
Harding said First Bank and Trust is one of the few small banks able to offer customers the same range of services they could get from a super-regional like NationsBank or First Union National Bank.
Yet the community bank is small enough, he added, so that service is personal. Customers can be matched to products that are most suitable for them.
Bruce Shaw of Ferguson Andrews visits First Bank and Trust three days a week, rotating among its branches and meeting customers by appointment.
First Bank and Trust also works with an insurance agent, Jack Wakeland, selling insurance products at bank branches.
"That sort of rounds us out to be a full-service financial institution," Harding said.
John Kilby, president of Bank of Fincastle, said his company's arrangement with Ferguson Andrews gives his bank "the ability to offer services the big banks offer."
The relationship makes some money for the bank, but he said the primary goal is to serve customers who might otherwise go elsewhere.
"It's worked very well so far," Kilby said.
Before Ferguson Andrews went into the business, he said, Bank of Fincastle had a similar program with Dominion Bankshares Corp. but on a more limited basis.
Because Fincastle is so close to Roanoke, Ferguson Andrews sends staff members on an as-needed basis.
They might meet in the client's home or at the Bank of Fincastle, he said, or the customers might visit Ferguson Andrews' office in Roanoke.
Bank of Buchanan also uses Ferguson Andrews.
President H. Watts Steger said the program hasn't made much money "but that's not the purpose."
The intent, he said, is to serve the needs of bank customers and to help maintain a sense of relationship with the bank with a variety of investments.
Ferguson Andrews stresses that it is not a bank and, therefore, is not in competition with its banking clients.
Karin Clothier, director of the bank referral program, said it has gained 10 client banks since February.
Others are Bank of Rockbridge, Miners & Merchants Bank of Grundy, Grayson National of Independence, Bank of Iager in West Virginia, two institutions in Richmond and one in Northern Virginia.
A broker is assigned to each bank so that he or she comes to know the town and its customers. Customers and bank staffers who see the same broker every week have a greater sense of comfort about the program, she said.
The program is successful for both Ferguson Andrews and the banks, she said, because customers are looking for investment alternatives to money market accounts and certificates of deposits.
Ferguson Andrews is a full service brokerage, Clothier said, so it can sell stocks, bonds, mutual funds, annuities, Treasuries or anything else on the market. "We offer everything."
The most popular choice among bank customers now, however, is mutual funds. Very few venture from a CD into stocks.
"The basic bank customer is conservative," she said.
Ferguson Andrews banking clients vary in their aggressiveness about the investment program. Some simply offer the service to customers who ask for it.
But she said most promote the program with statement stuffers, advertising and sponsorship of seminars.
Revenue from the programs also depends on the bank's attitude, according to Clothier. Those who are aggressive in promotion and in training for its staff are more successful than banks whose attitude is "laid back."
Each bank and Ferguson Andrews split commissions from sale of investment products, but the percentages vary with the product, Clothier said.
The banks get a bigger share for mutual funds and annuities, she said. The percentage is lower for the banks on other, and less popular, products.
In one recent month, she said, Ferguson Andrews brought in $2,200 for one client. That makes a significant impression in the earnings report of a small bank, she pointed out.
by CNB