The best bank for your financial needs - includes an article on private banking

Black Enterprise, July, 1992 by Evette Porter

When picking a bank, convenience takes a back seat to interest rates, personal services and a healthy balance sheet.

Not so long ago, opening a bank account was a snap. All a person had to do was march down to the local branch and sign up. And if folks were enticed to go to a distant bank, it was because they were able to get a percentage point higher in interest rates and walk away with a brand new toaster under their arm.

But anyone who has been to the local branch lately is bound to notice the changes taking place in banking. Not only are banks competing more fiercely than ever with each other for customers, they're offering products and services that were once only available through insurance and brokerage firms.

Today, many large commercial banks, along with smaller community banks, are becoming full-service financial supermarkets. They offer everything from free-checking accounts and certificates of deposits (CDs) to asset-management accounts and mutual funds. The era of opening a simple passbook savings account is over.

Yet, in spite of this surge in banking activity, a vast array of savings and investment vehicles goes untouched. "That's because a lot of consumers just don't realize all the services banks now offer," says Rick Shelby, vice president in retail sales with Seafirst Investment Bank in Seattle, formally Security Pacific Bank. According to Shelby, Seafirst, like many of the major banks, offers virtually the same investment products that most brokerage firms do: tax-free municipal bonds, treasury securities, government-backed securities and discount brokerage services.

To stay on the playing field and compete with majority banks, many of the nation's black-owned financial institutions are expanding the number of their products and services to attract customers. But the cost of implementing full services is still financially prohibitive for many black commercial banks, says Casdell Singleton, senior vice president of Atlanta-based Citizens Trust Bank.

"The best way for smaller black banks to offer more products and services is to establish a joint-venture relationship with an outside agency, preferably a minority-owned one," explains Singleton. "Initially, we would collect a fee from them. But once we learn the business and train our people, it will be easier for us to take over." At the end of 1991, Citizens had raised $8.5 million in capital with $111 million in assets.

The BE FINANCIALS LIST firm also is considering offering corporate trusts and insurance.

Granted, banks are doing a lot more to encourage customers to keep their money in one place--and as they see it, the best place is with them. But is the bank really the best place to put your savings, investments and retirement dollars? Three post-Depression generations have built up confidence in the banking industry only to have it shaken by recession-battered financial institutions.

Since 1985 some 1,181 banks have folded, and the losses at many big banks are still mounting. Then there was the fear that the Federal Deposit Insurance Corp.'s (FDIC) bank insurance funds would dry up. However, FDIC was able to borrow up to $30 million last year from the Federal Treasury to cover losses from closing banks.

This impending shortfall in the banking industry hasn't eased consumer anxiety. In fact, the phones have been ringing off the hook at Veribanc Inc., a Wakefield, Mass.-based firm that sells financial stability ratings of U.S. financial institutions.

But this picture is not as bleak as it looks. Anyone who has a federally insured account under $100,000 is safe. Insured depositors nationwide have been fully reimbursed when their banks failed (although some have suffered losses for amounts over $100,000).

Even if you're confident that your bank won't go belly up, is it capable of meeting you financial needs? Will the bank leverage your mortgage should you need additional funds to send your teenage son to college? Are you recognized as a valuable customer because you've had an account at your branch for more than 10 years? If your answer is no, maybe it's time to switch banks.

Just as important: Is one bank enough when it comes to cultivating your savings and investment dollars? Or is it better to spread your seeds among many financial institutions? The following advice will help you evaluate your bank and to take advantage of a crop of products and services that will turn your portfolio green.

One-Stop Financial Center

Some years ago, the Federal Reserve Board approved a measure allowing bank holding companies to engage in certain types of securities transactions. Several bank holding companies now have the authority to underwrite corporate stocks and bonds (under limited conditions). And banking institutions are able to engage in interstate operations and offer such services as credit cards accounts on a regional or national basis.

Many banks also have begun offering proprietary or private label funds, discount brokerage services and mutual funds marketed by third-party service firms.