THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Tuesday, October 1, 1996 TAG: 9610010261
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
DATELINE: NORFOLK LENGTH: 62 lines
In an era of sluggish loan growth and tougher competition, the biggest challenge for bankers will be finding good customers and capturing more of their business, the chief executive of banking company Wachovia Corp. said Monday.
``The battle lines are already drawn in a struggle to gain the hearts and wallets of our customers,'' L.M. Baker Jr., president and CEO of Winston-Salem, N.C.-based Wachovia, told about 200 bankers. However, ``it is not clear that we are prepared for the coming engagement,'' he said.
If bankers expect their institutions to survive, they must continue cutting costs and applying more sophisticated technology to their work, said Baker, a native of Lovettsville, Va., a rural community in the northernmost part of Virginia.
``For almost every purpose, there is economical access to vast storehouses of knowledge for large and small organizations and for individuals,'' said Baker, who graduated from the University of Richmond and earned a master's degree in business administration from the University of Virginia.
Easier access to information and the declining cost threaten the traditional ways of delivering financial services. To succeed, bankers will have to gather and process information more quickly than their competitors, Baker said at the Virginia Bankers Association conference at the Omni International Hotel.
Wachovia, the 23rd-largest banking company in the country, acquired two large banks in Georgia and South Carolina during the past decade. However, it has avoided the aggressive expansion pursued by its Charlotte-based rivals, NationsBank Corp. and First Union Corp.
Earlier this year, Wachovia crossed the state line and opened its first Virginia branch in downtown Norfolk. The office handles corporate lending, municipal finance, auto-dealer finance, commercial mortgage services, and banking services mostly for the affluent.
In a thinly veiled reference to last week's speculation that Wachovia might be interested in buying Signet Banking Corp. in Richmond, Baker joked that Wachovia has devised a new service for bankers trying to boost the price of their institutions' stock.
``For a handsome fee, I'll fly into your local airport and have lunch,'' he said.
Baker contrasted the mounting pressure on banks with the favorable conditions that most banks enjoyed in past decades.
``Our customers accommodated sprawling delivery systems, tolerated confusing reports about their accounts, and often accepted in an unquestioning manner the prices that were posted,'' he said.
``They borrowed with gusto, piling up mounds of debt at a pace through the '80s that wildly exceeded the natural growth in the economy. This is not likely to happen again.''
In response to a question, Baker predicted that a few large nationwide banks will emerge. But these banks will risk losing touch with their customers.
``If you're not cost effective and if you're not in touch with what your customer wants, they will wander away from you,'' he cautioned. ILLUSTRATION: Color photo by Beth Bergman\The Virginian-Pilot
L.N. Baker Jr., chief executive of Wachovia Co., spoke Monday at the
Virginia Bankers Association conference in Norfolk. by CNB