05.07.01-Community Banks Micro Business

COMMUNITY BANKS, THRIFTS AND CREDIT UNIONS DOMINATE THE MICRO BUSINESS MARKET FOR LEAD BANK RELATIONSHIPS


An exodus from regionals and mega-regionals toward community banks expected to continue

CALABASAS, CALIFORNIA (May 7, 2001) - A new study of 1,000 micro market companies (business with annual revenue between $50,000 and $999,999) indicates that substantial migration away from large bank holding companies and toward smaller community banks, thrifts, and credit unions has taken place over the last three years. The study suggests this trend will probably continue for the foreseeable future.

"The vast micro business market, which comprises nearly eight million companies, has placed a high premium on excellent, personalized service," said Mike Marselli, CCM, Business Markets Analyst at Informa Research Services, Inc. "While large bank holding companies have focused their energies on reducing channel costs through expanding online capabilities, micro market companies have quietly shifted their relationships elsewhere."

Based on this study the top 20 bank holding companies control one-third of all micro relationships, small state banks ($500 million to $1.9 billion in assets), community banks (less than $500 million in assets), small thrifts, and credit unions control nearly one-half (48%) of all micro market relationships. In just the last three years, more than 840,000 (11%) micro businesses have switched their primary business deposits to one of the smaller providers. More than four times as many community bank customers (20%) indicate that they have switched lead banks in the last three years compared with the top-20 bank customers at only 5%.

"These smaller institutions have not forgotten the fundamentals," said Marselli. "Micro market owners are not looking for sophisticated Web capabilities, period. They're more interested in getting good rates on loans and personalized service - just good basic banking."

Mike Marselli, a certified cash manager, has over 13 years experience in the financial services industry, serving with Dun & Bradstreet Information Services and PSI Global prior to joining Informa Research Services last year. His background includes experience in business-to-business market strategies, industry trend forecasting, e-commerce trend analysis, and primary market research.

The business market research study, performed by Informa Research Services, includes nearly 1,000 interviews with micro market companies. These interviews included nearly 700 personal interviews with micro business owners. The study was conducted between January and April 2001, and consisted of telephone-based interviews with micro market companies throughout the US. The study has a +/- 3% margin of error at the 95% confidence level.


About Informa Research Services, Inc. Based in Calabasas, CA, Informa Research Services, Inc., provides the financial industry's most extensive array of market research and decision-support information.

Conducting daily surveys of the retail and business products offered by more than 5,000 financial organizations nationwide, Informa Research Services, Inc., currently supports the product pricing decisions of more than 2,100 clients, representing all 50 states and including the top 25 financial institutions. This electronically transmitted competitive pricing intelligence effectively generates profitable responses to continual market changes, enables clients to effectively position deposit and loan products within local markets, maximizes interest income, and manages interest expense. Informa is the premier provider of fee and feature studies used to determine the competitiveness of fee-based services. In-depth studies are also available on cash management services, trust products, mystery shops, and other specialized services.

Informa Research Services, Inc., is a division of London-based Informa Group PLC (LONDON:INF). Informa Group offers "must have" business-to-business information through 3,500 conferences and seminars and nearly 1,500 print and electronic publications from offices in 19 countries.