Originally created 04/03/00

Bank balances technology, services

Staff Writer Damon Cline sat down with Charlie Rivers, president of First Union's Augusta operations, to discuss the banking industry and the company's presence in the community.

Q: How do you explain to people what First Union is? About half of the company's revenue comes from sources other than traditional banking. First Union Corp. doesn't even have the word "bank" in the title.

A: We talk about being well-rounded. We don't have just a single purpose. We don't offer just checking and loans. We have other products -- cash management, 401(k) plans, equipment leasing -- so we're a multifaceted way of looking at solutions.

Q: Do you think there will be a day when there will be no physical bank branches because all transactions will be done electronically? With things like ATM cards, check cards, Internet banking, most people never need to step inside a bank building.

A: There is definitely going to be a shift in not needing as many physical locations, but I think you'll always have people who want to come into some kind of location. The location could be kind of a multifaceted location where three different businesses completely different from banking are located in the same building.

I don't think bank branches will ever go away completely. Look at full-service gas stations -- we still have a lot of full-service gas stations around.

Q: Do you think Internet-based banks are a threat? They don't incur the operational costs associated with running physical bank branches, so they tend to pay better-than-average rates on deposits.

A: I think they are just another competitor. We've got about 1 million customers online, so we have our own Internet banking. We see huge things in the future there.

We also have a product that can pass on savings called Express Checking. If the customer never comes in the bank and does everything through ATMs and direct deposit, there are no (monthly) charges.

At this point in time, it appears people still want that personal connection; they still want that relationship.

Q: Consumers want the convenience of electronic transactions, yet they also demand a certain level of personal service when they need it. They don't want to hear a machine when they call their bank branch with a question. It must be difficult to balance the two needs.

A: You're right on target. We're trying to figure out what the balance is right now. What is the proper mix? What is the right number of physical locations vs. the ability to do business electronically?

I think a lot of that will evolve as more and more people become comfortable with the Internet. Today, the Internet is in its early stages, like TV was in the 1950s. The traditional banks and banks like First Union who are so large now remind me a lot of the big automobiles in the 1950s and '60s. They have to figure out how to be more efficient, more stylish for this era.

Q: Banks are always talking about how expensive it is to build and maintain bank branches. What about bank buildings? I notice the First Union building here is on the market. Are bank towers a thing of the past?

A: I think there's really two parts to that. I think you'll always see towers with the various institutions' names on them. This building has been for sale for a long time. It's not that we don't want it -- it's just the fact that we've got a number of these buildings on the East Coast. We probably got 20 buildings like this from mergers. We've got substantial dollars tied up in them, and we really aren't in the real estate business. We're not going to sell something and take a loss on it. We've got any number of buildings on the East Coast that if an investor wanted them, we'd sell them.

I think a lot of people are making a lot of fanfare out of (this building). We would still stay downtown and would probably still stay in this building (after it was sold).

Q: You once commented Augusta was an important market and a profitable market for First Union. Why is that?

A: A couple of things. The Georgia Railroad Bank was such a great bank and had such a significant market share, so it makes it a very profitable operation for us. We cherish any place where we have a No. 1 market share. We try to maintain that.

We think Augusta has great potential from a standpoint of climate and work ethic. We think we'll see a lot more people retiring to this area. It's fascinating to see the number of senior military people who come back here to retire after having lived all over the world. So with that, and with the work ethic of the people here, we feel like this area has got great potential for growth.

Q: Having been in the industry for four decades, there must be some things about the business you really enjoy and strongly dislike. What are they?

A: (Pauses) That's a tough question. I would probably say that the fun part for me has been able to see the people I've worked with over the years, the customers who have been successful and have been able to grow their businesses.

On the flip side of that, I really don't know. When we've seen change in the business, it's generally been positive, a better mousetrap if you will. The technology and information systems are amazing. One of the neat things about First Union is that every product that our people sell in the branches goes through our system electronically, so on any given day we can see exactly how many products anybody in the corporation has sold just by going into the system. Any morning we can see what any person -- from Miami to New England -- has sold. That's quite different from when it used to take months to roll stuff up.

I guess the downside would be what our former chairman used to call kudzu. Everyone in the South knows what kudzu is, and that's what he used to call something that would get all tangled up and have to be worked out. We have to continuously wrestle with those problems. When I started with the company, there were less than 3,000 employees. Now there's over 70,000. We don't want to get caught up in a bureaucracy. That's why we stress ownership of problems. We don't want to hand it off to somebody else and forget about it. We stress ownership to the point where that thing is tracked all the way through so we can determine where the problem stands rather than just letting it go in a black hole somewhere.

Q: How do you see First Union bank evolving? Do you think it will try to be a coast-to-coast bank?

A: Well, I don't have any inside information, but my hunch is that we will continue to develop our East Coast franchise. With our chairman having stepped down due to illness and with one of our most difficult mergers having been in Philadelphia (CoreStates Financial Corp. in 1998), my hunch is we will continue to work on the East Coast. We've been trying to get that merger to run right.

Q: Downsizing at the company reduced employment by thousands of jobs during the last couple of years. Augusta didn't seem adversely affected.

A: No, we really weren't. I think all the changes in this market occurred in the '80s. We're continuing to fine-tune things, but this market is very stable for us.

Q: You're a board member of A-NIC (Augusta Neighborhood Improvement Corp.). Do you think the group can really have an impact on inner-city redevelopment?

A: Well, I think Augusta Tomorrow, which we were also a part of, too, has struggled for a long time trying to figure out how to help with low- to moderate-income housing. In the banking community, we've had the products and all these things we wanted to use. I think what A-NIC does is partner up the public and private segments to do something.

There's a study going on now by a consultant who is doing some mapping for A-NIC. Once that is completed, then I think there will be an opportunity to talk with the folks in the Laney-Walker area to determine what needs to be done. Banks are interested because we've got so many products, like 100 percent financing. I see this as a vehicle to get so much of that moving.

You might say, "Well if you've got all of these products, why haven't you put them in place before?" Well, one of the things we need help with is educating people on how to budget and maintain their homes and do a lot of things so it doesn't just become something that is given to somebody and they can't maintain it and keep it going. That defeats the purpose. I think this is really an effort to work in a low- to moderate-income area where you can have firemen and policemen and people of all walks of life to come in and live. You have to have a broad base of folks. One of the great opportunities we have over there is the fact that you've got the medical college on one side and the health department on the other, so you can work from a backdrop rather than working in the middle of a doughnut. If you've got an area that is struggling, and work the middle area, then you've still got problems surrounding it. I think (the Laney-Walker area) is fortunate it doesn't, as far as I can tell, have any huge slumlords. In some areas I've seen, you have people who are absentee owners controlling large blocks of property, and that becomes a hurdle. But I don't see a lot of that going on here. We're excited about it. We think A-NIC is a great vehicle.


Company: First Union Corp.

Headquarters: Charlotte, N.C.

Founded: 1908, as Union National Bank. Merged with First National Bank and Trust Co. of Asheville in 1958 to become First Union.

1999 Sales: $22 billion.

1999 Assets: $253 billion.

1999 Deposits: $141 billion.

Employees: 71,500, 200 in Augusta banking operations. The company's credit card subsidiary employs an additional 150.

Branches: 2,400 in 12 East Coast states. Metro Augusta has 14 branches.


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