ABA Banking Journal - March 2008 - (Page 20)
Community Banking Pass the Aspirin report in this issue, and on our website at www.ababj.com. The survey found that 23.5% of the banks responding had installed a VOIP phone system in the last two years, in search of efficiencies. Note that corporate adoption of VOIP is not necessarily the same thing as an individual using an internet telephone service, such as Vonage, for making long-distance calls free or at reduced rates by using the internet. In the corporate environment, VOIP can serve as a means of operating telephone systems that rely on Ethernet networks or virtual private networks, rather than the public internet. And the calls covered by the VOIP portion of a bank’s phone and data system may actually involve only calls and communications within and between a bank’s own facilities, rather than to the world at large. The Headache: Banking In “Interesting Times” A NEED FOR MOBILITY, CONVENIENCE First Hope Bank, N.A., operates six branches in northern New Jersey, and until recently the bank had a separate private branch exchange at each location. The $370.6 million-assets bank’s office network had evolved over time, and the six systems, ranging from seven years old to nine years old, were simply outpaced by the growing need for state-of-the-art voice and data communication at the bank. The six locations were linked by T-1 lines that carried both voice and data traffic among them. Furthermore, in an age when lessexpensive alternatives were available, these exchanges were growing comparatively more expensive to continue operating. The First Hope Bank branches reside in multiple counties and area codes, which meant that many “internal” phone calls were really toll calls. The centralization of the bank’s loan department in one location meant toll charges for out-ofarea-code customers and employees alike. Increasingly, what the bank lacked was bandwidth, functionality, and user friendliness, both for internal users and customers calling the bank from the outside. In addition, the outdated setup had s the economy continued to challenge bankers, we asked “Pass the Aspirin” prescribers what effects their banks were feeling and what they were doing about it. Among our questions: • What impact has the Fed’s recent interest rate cuts had on your market and activity at your bank? • Has your bank made any significant shift in credit stance in the last six months? • How does your local economy today compare to a year ago? • What steps has your bank been taking to ride out this troublesome period? If you’d like to become a prescriber, e-mail firstname.lastname@example.org. And if you have different views on this month’s questions, send them in and we’ll add them to the postings at www.passtheaspirinplus. com. Remedy 1 Ann Marie Mehlum, president and CEO, Summit Bank, $83.4 million-assets, Eugene, Ore. It’s too early to tell what effect the cuts have had in our market. At the bank we are lowering deposit rates while some of our non-bank competitors are keeping deposit rates high, which we expect could impact our deposit base. On a positive note, we are marketing our conventional mortgage business and funding commercial loans that continue to look pretty good in our market. In terms of our credit stance, one change is that we are not funding spec projects for noncustomers, unless the borrowers have longer-than-usual staying power. As residential home sales slow, we want to ensure we can be there for our existing customers first. In addition to the downward trend in industries related to residential real estate industries, our lumber industry is in a slump, as is the motor home manufacturing sector, both significant contributors in our local economy. But, local and regional economists are predicting that most areas in Oregon should fare comparatively well in this recession. There are many sectors of our economy, such as medical, that continue to grow and have a positive impact. And, our markets weren’t as “hot” as some of the markets that are cooling rapidly. The most troublesome aspect of our current situation is that we all get painted with the same brush on Wall Street. We’ve had to communicate with shareholders that our stock is not down due to current or expected losses in our loan portfolios, as is the case with the large banks that have played a major role in the growth of the subprime business. Like thousands of community banks, we didn’t make those loans nor invest in securities backed by them. But the public doesn’t understand these differences. What gives me a headache is that the Fed bails out these huge banks with rate cuts, yet there’s no reason to expect any change in these banks’ “short-term-focused” strategies in the future. We received 12 credit card solicitations this week at our house, all from the big three. Half of them were addressed to my two sons who are in college and have no income to repay credit card bills, not to mention no credit history. In fact, we received a few more unsolicited solicitations than usual, including offers with low starting rates and additional complications that could push card holders into 30% rates. Regrettably, unless there’s a founder or major shareholder at the helm, it’s getting harder and harder to find responsible leadership at gargantuan companies in any industry, including mine: banking. Remedy 2 Blair Hillyer, president and CEO, First National Bank,$171.5 million-assets, Dennison, Ohio. The Fed rate cuts haven’t changed anything, except for hurting our profitability for the rest of 2008. We have tightened up some in the credit area, mostly in indirect auto. We also are watching home values carefully, to make sure that equity is real. We are also refusing to take out credit card companies 20 MARCH 2008/ABA BANKING JOURNAL Subscribe at www.ababj.com
Table of Contents for the Digital Edition of ABA Banking Journal - March 2008
ABA Banking Journal - March 2008
What Irks the Street
Snapshot: Big Regional Variance in C&A Lending
100th Anniversary: Then & Now
ABA Chairman’s Position
Three Go VOIP and Like It
Pass the Aspirin
Annual Special Section: Competitiveness Survey/12th Year
OUTSOURCING: Why “Out” Is “In”
DEPOSITS & FUNDING: Game Remains the Same...
TECHNOLOGY: Bits, Bytes & Bob
REMOTE DEPOSIT CAPTURE: Making the Promise Pay Off
HEALTH SAVINGS ACCOUNTS: Banks’ Belated Tonic
EXAMINATIONS: Calm Before a Storm?
The RDC Experience: Captivating
Negative Ads Work. But Do They Hurt?
Good Time To Retool Lending Systems
Risk Management Keeps Flood Insurance Ducks In Line
To Advertise/ Index of Advertisers
ABA Banking Journal - March 2008