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David vs. Goliath

by Nora Edinger

REGIONAL EDITOR

More than a few Doddridge County residents are familiar with the family pictures Ray Jones keeps in his office.

Even though he's president and chief executive officer of the independently owned West Union Bank, Jones sees a number of customers personally.

"The thing that we really have over the larger financial institutions is the personalized service," said Jones, feistily competitive after retiring from more than 40 years of big-bank management with institutions such as Huntington Banks and Bank One.

"I think we can knock the socks off big banks in these small communities. I don't think some of the big banks have a clue as to how to deal with this kind of customer base."

Jones is not the only one who thinks little-David banks have some stones in their slings.

A few miles up the I-79 corridor, banking maverick Douglas Leech heads up one of six independent banks that have been chartered in West Virginia in the past five years, Morgantown's Centra Bank, Inc.

Centra has grown to $32 million in total assets since opening in February, surpassing, in six weeks, its $28 million goal for its first year, said Leech, president and chief executive officer.

In comparison, the 107-year-old West Union Bank has about $85 million and the state's largest bank, One Valley Bank Corp., has about $6.5 billion. Once One Valley's pending merger with Branch Bank & Trust of North Carolina is completed in July, it anticipates assets of more than $52 billion, making it part of the 18th largest financial institution nationally, said Terry Puster, One Valley corporate marketing director.

"The reaction of the community has been overwhelming in terms of stock buying and as customers," said Centra's Leech, who also hails from a big-bank background. "I think it has to do with the philosophy of our bank."

The locally owned, locally managed Centra has policies such as having a live person answer all incoming calls and considering personal character along with financial assets when making loan decisions. Even its name reflects an ideal of being "central to the community," Leech said.

While bucking the trend toward mergers, he is confident small, independent banks are needed in the market. Centra's early success even has bank leaders talking of a non-merger type of growth, the development of a chain of independently managed Centra banks.

"Community banking is alive and well," Leech proclaimed.

In the meantime, he said chartering and running just one independent bank has been the most fun he has had in his career. That doesn't mean he wants to see Goliaths leave the field, he was quick to add.

"The citizens and corporations in our state have benefited a great deal from large banks," Leech said, adding only mega-banks can handle the loans that drive development such as malls and industry.

One Valley's Puster and Sharon Bias, state commissioner of banking, agreed.

"When you start getting into clients like Toyota and the FBI center and players of that size, they look for larger institutions," Puster said. "That (presence of big banks) helps keep that banking business in the state."

Ironically, the climate that has created those big West Virginia banks is partially responsible for fueling community bank growth, Bias added.

"The mergers have resulted in lots of good bankers being freed up to do their own thing," Bias said of managerial downsizing.

She sees the new charters as proof of that. While no charters were issued between 1985-95, the state chartered six independent banks in the last five, merger-filled years.

"There are changes in the opportunities and changes in the economy and there's a perceived need for local banks," Bias said of the nationally favorable atmosphere for both independent charters and mega-mergers.

Bias said smaller, independent banks are at somewhat of a disadvantage in terms of competition for staff and technological advances, which are often quite expensive. Coalitions of independent banks are springing up that allow smaller banks to catch up with technological advances, such as Web banking, in six months to a year.

Puster, who commented that both One Valley and BB&T are striving to emulate independent bank strengths such as local loan decision-making, said even One Valley has faced challenges in technology funding. Puster said One Valley, which was chartered in the late 1980s after a series of mergers within West Virginia, could not afford anything near the $128 million BB&T is planning to invest in Internet banking development.

With that kind of money buoying big banks, Bias is interested to see how the banking industry will balance large and small customers' desires for large and small banking.

"It's going to take just extraordinary talent to run those (independent) banks. ... One Valley has always been a tough competitor," Bias said. "If they do it (merger) well, they're going to be a tougher competitor."

Reflecting on the technology investments, Bias believes Internet-based banks will eventually be a big challenge for brick-and-mortar banks of all sizes. E-banking has gotten off to a bumpy start because of difficulty entering the profitable-loan arena and a need for expensive marketing to develop a presence, but "it will be a factor someday," Bias said.

Regional editor Nora Edinger can be reached at 626-1403.

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