New Mexico banking: innovative branching

New Mexico Business Journal, June, 1994 by Arlene Cinelli Odenwald

Banker Ike Kalangis didn't really have a crystal ball, but his projections two years ago apparently were far more accurate than any fortune teller could have hoped for.

Then, Kalangis was talking about the banking industry facing a future of continuous change, consolidation and standardization.

He was more on the mark than perhaps even he suspected -- nothing short of prophetic.

Back then, Kalangis was president and chief executive officer of Albuquerque-owned Sunwest Financial Services.

Today he is president, chairman and chief executive officer of Boatmen's Sunwest Inc., owned by Boatmen's Bancshares of St. Louis.

The three other largest banks in New Mexico today are also owned by out-of-state interests.

BankAmerica of San Francisco owns Bank of America New Mexico; First Security Corporation of Salt Lake City owns First National Bank in Albuquerque; and Norwest of Minneapolis now owns United New Mexico Financial Corporation.

The fifth largest bank in New Mexico -- First National Bank in Farmington -- is now the largest home-owned bank in the state.

With most of the state's largest financial institutions now owned by larger regional banks, New Mexico's largest banks are now in the big leagues.

Times indeed are changing.

But if Kalangis and Edward O'Leary, president and chief executive officer of First Security Bank of New Mexico, are assessing the changes properly, it means small business owners should reap more benefits from the new financial arrangements.

For one thing, small business executives should see more competitive prices for the same financial product.

In addition, they'll have access to new products, regional expertise and sophisticated technology.

Both the home and business consumer will see a wider array of products, offered at increasingly competitive prices, says O'Leary, simply meaning more choices in the financial market place.

"We're already seeing evidence of this now," says O'Leary.

"Competition can help the small businessman," says Kalangis. "That's good -- unless banking conglomerates start moving management around.

"That exactly what small business owners are afraid of," he says. "... Having to start a new banking relationship with new people."

This relationship, in fact, may be affected by another piece of legislation currently pending in Congress, legislation that most financiers believe will be law, TABULAR DATA OMITTED perhaps as early as June.

Called interstate branching, the measure will allow banks to branch across state lines.

Though some believe this already occurs through allowable maneuvers in current law, the new legislation should indeed make branching easier.

How will interstate branching affect New Mexicans?

First, it means that big money banks like Citibank will be able to open a branch in Albuquerque or any other city in the state.

Secondly, it means that banks that own banks in other states can turn those banks into branches.

If the measure becomes federal law, in one move a bank that owns six banks in six states could have one bank with six branches in six states, says O'Leary.

With branch banking, the main bank can also operate branches without local presidents or boards of directors.

Asked whether First Security Bank intends to do that, O'Leary says there are no such plans.

Branch banking can certainly cut costs by eliminating top administrative posts, allowing banks to offer more attractive financial products at competitive prices.

When O'Leary came to New Mexico three years ago, Albuquerque was in its waning days of relative financial isolation.

Historically self-contained, Albuquerque was not linked financially with other cities, the way Philadelphia is linked to New York, or Hartford to Boston.

"We didn't have those clear financial linkages to other major regional financial centers that other cities have," O'Leary recalls.

Because of this, Albuquerque has had limited perspectives and limited financial products.

"The new environment should be wonderful for business owners," says O'Leary.

From a consumer's point of view, sophisticated technology will make their banking more convenient, efficient and accessible.

As for Sunwest, Kalangis says: "Boatmen's just like us--concerned about consumers and the small businessman."

Operating under Boatmen's Bancshares for at least two years, Sunwest has kept local presidents and boards of directors in each of its community banks, 11 of which are located in communities in New Mexico and one in El Paso.

Boatmen's believes in community banking, says Kalangis, and "we're staying just as we are."

In another coup for New Mexico, Sunwest has convinced Boatmen's Bancshares to consolidate its credit card operations with its own. Boatmen's had credit card operations in Delaware and Missouri.

The move will consolidate both operations in Albuquerque, adding 30 to 40 new jobs to the Duke City, not to mention the additional revenue to local government.

Before Boatmen's acquired Sunwest, the bank had an $85 million Mesa Grande credit card business; with Bancshares it is now a $250 million operation.