As directors settled down, Philip Johannsen set the mood by pointedly consulting his watch. "I've already had to cancel one appointment this afternoon," the MidContinent Rubber chief grumbled, "and I've other things to do, so let's keep it short." Several others nodded agreement.
"I'll be as brief as possible, gentlemen," Alex promised vLen Jerome Patterton had introduced him formally. "My intention is to make four points." He ticked them off on his fingers as he spoke.
"One, our bank is losing important, profitable business by failing to make the most of opportunities for savings growth. Two, an expansion of savings deposits will improve the bank's stability. Third, the longer we delay, the harder it will be to catch up with our many competitors. Fourth, there is scope for leadership which we and other banks should exercise in a return to habits of personal, corporate, and national thrift, neglected far too long."
He described methods by which First Mercantile American could gain an edge over competitors a higher savings interest rate, to the top legal limit; more attractive terms for one-to-five-year certificates of deposit; checking facilities for savings depositors as far as banking law allowed; gifts for those opening new accounts; a massive advertising campaign embodying the savings program and the nine new branches.
For his presentation Alex had left his usual seat to stand at the head of the boardroom table. Patterton had moved his own chair to one side. Alex had brought in, also, the bank's chief economist, Tom Straughan, who had prepared charts displayed on easels for the board to view.
Roscoe Heyward had eased forward in his seat and was listening, his face expressionless.
As Alex paused, Floyd LeBerre interjected, "I have one observation right away."
Patterton, his habit of politeness back in place, inquired~ "Do you want to take questions as we go, Alex, or leave them to the end?" "I'll take Floyd's now."
"This isn't a question," the General Cable chairman said unsmilingly. "It's a matter of record. I'm against a major savings expansion because if we do it we'll be ripping our own gut. Right now we've big deposits from correspondent banks…"
"Eighteen million dollars from the savings and loan institutions," Alex said. He had expected LeBerre's objection, and it was valid. Few banks existed alone; most had financial ties with others and First Mercantile American was no exception. Several local savings and loan institutions maintained large deposits with FMA and fear that these sums would be withdrawn had deterred other proposed savings activity in the past. Alex stated, "I've taken that into account.
LeBerre was unsatisfied. "Have you taken into account that if we compete intensively with our own customers we'll lose every bit of that business?"
"Some of it. I don't believe all. In any case, new business we’ll generate should far exceed what's lost." "So you say." Alex insisted, "I see it as an acceptable risk."
Leonard Kingswood said quietly, "You were against any risk with Supranational, Alex."
"I'm not against risks. This is a far smaller risk. The two have no relation." Faces around the table mirrored skepticism. LeBerre said, "I'd like to hear Roscoe's view." Two others echoed, "Yes, let's hear Roscoe."
Heads turned to Heyward who had been studying his folded hands. He said blandly, "One doesn't like to torpedo a colleague."
"Why not?" someone asked. "It's what he tried to do to you."
Heyward smiled faintly. "I prefer to rise above that." His face went serious. "I do, however, agree with Floyd. Intensive savings activity on our part would lose us importent correspondent business. I do not believe any theoretical potential gain is worth it." He pointed to one of Straughan's charts indicating the geography of proposed new branches. "Board members win observe that five of the suggested branches would be in locations close to savings and loan associations who are large depositors with FMA. We can be sure that that win not escape their attention either."
"Those locations," Alex said, "have been carefully chosen as a result of population studies. They're where the people are. Sure the S&Ls got there first; in many ways they've been more farsighted than ~banks like ours. But it doesn't mean we should stay away forever."
Heyward shrugged. "I've already given my opinion. I'll say one thing, though I dislike the entire idea of storefront branches."
Alex snapped, 'they'll be money shops the branch banks of the future." Everything, he realized, was coming out contrary to the way he had intended. The subject of the branches themselves he had planned to get to later. Well, he supposed it made no difference now.
"From their description," Floyd LeBerre said he was reading an information sheet Tom Straughan had circulated "those branches sound like laundromats."
Heyward, also reading, shook his head. "Not in keeping with our style. No dignity."
"We'd do better to shed some dignity and add more business," Alex declared. "Yes, storefront banks resemble laundromats; just the same, they're the kind of branch banks which are coming in. I'll make a prediction to the board: Neither we nor our competitors can go on affording the gilded sepulchers we have as branch banks now. The cost of land and construction make it senseless. In ten years, half at least of our present branch banks will have ceased to exist as we know them. We'll retain a few key ones. The rest will be in less expensive premises, totally automated, with machine tellers, TV monitors to answer queries, and all linked to a computer-center. In planning new branches including the nine I'm advocating here it's that transition we should be anticipating."
"Alex is right about automation," Leonard Kingswood said. "Most of us see it in our own businesses, moving in faster than we ever expected."
"What's equally important," Alex asserted, "is that we've a chance to jump ahead profitably that is, if we do it dramatically, with flair and fanfare. The advertising and promotion campaign would be massive, saturation coverage. Gentlemen, look at the figures. First, our present savings deposits substantially lower than they should be…"
He moved on, aided by the charts and an occasional amplification by Tom Straughan. Alex knew that the figures and proposals, which he and Straughan had toiled over, were solid and logical. Yet he sensed flat opposition from some board members, a lack of interest by others. Lower down the table a director put a hand over his mouth, stifling a yawn. Obviously he had lost. The savings and branch expansion plan would be rejected and would be, in effect, a vote of "no confidence" in him as well. As he had earlier, Alex wondered how long his own tenure with FMA could continue. There seemed little future for him, nor could he see himself as a participant in a Heyward-dominated regime.
He decided not to waste more time. "Okay, I'll leave it there, gentlemen. Unless there are further questions."
He had not expected any. Least of all did he anticipate support from the source from which suddenly, amazingly, it came.
"Alex," Harold Austin said with a smile and friendly tone, "I'd' like to say thank you. Frankly, I'm impressed. I hadn't expected to be, but your presentation was convincing. What's more, I like the idea of those new branch banks."
A few seats away Heyward looked startled, then glared at Austin. The Honorable Harold ignored him and appealed to others at the table. "I think we should look at this with an open mind, putting aside our disagreements of this morning."
Leonard Kingswood nodded, as did several others. Still more directors shed post-lunch drowsiness, their attention returning. Not for nothing was Austin the FMA board member with longest service. His influence was pervasive. He also was adept at swinging others to his points of view.
"Near the beginning of your remarks, Alex," he said, "you spoke of a return to personal thrift, and leadership which banks like ours might give." "Yes, I did." "Could you expand that thought?" Alex hesitated. "I suppose so."
Should he? Alex weighed choices. He was no longer surprised at the interjection. He knew exactly why Austin had switched sides.
Advertising. Earlier, when Alex had suggested a "massive advertising campaign" with "saturation coverage," he had seen Austin's head come up, his interest clearly quicken. From that point it was not hard to see inside that head. The Austin Advertising Agency, by reason of the Honorable Harold's directorship and influence at FMA, had a monopoly of the bank's advertising business. A campaign such as Alex envisaged would bring substantial profit to the Austin Agency.