Bankers who've set up shop in Lawrence in recent years say the gamble to cash in on the city's growth has paid off.
"I think it has met or exceeded our expectations," Todd Sutherland, president of The University National Bank, said of the Lawrence market.
Sutherland and a group of investors opened The Savings Bank of Lawrence, a newly chartered federal savings bank, in 1988. Last fall they converted the institution, at 1400 Kasold, to a commercial bank.
However, bringing in business hasn't been a cakewalk, Sutherland said. "I think it's more competitive than we foresaw, with the new entrants who came in after we did."
But Sutherland's group was joined in a small stampede of new institutions that set their sights on Lawrence during the building boom years of the mid- to late-1980s. At the same time Sutherland's group was making its plans, First Savings Bank of Manhattan, or FirstBank, announced its intentions to open a Lawrence branch at 2710 S. Iowa.
Then in 1990, Bank IV, the Wichita-based banking giant which had been eying Lawrence for years, arrived in town with the purchase of the Lawrence branch of defunct Anchor Savings, 900 Ohio.
"Lawrence has been one of the Kansas communities we've always been interested in," said Brent Thompson, a Bank IV spokesman in Wichita.
Finally, when state branch banking laws were liberalized last year, the Emprise Bank group, another Wichita-based concern that had been looking for an entry into Lawrence, opened an office at 2535 S. Iowa.
SUTHERLAND isn't alone in his assessment of the competitive nature of the local marketplace.
Although Lawrence is rich in opportunities for lending, Phil Brokenicky, FirstBank's president, said it's no place for bankers who are impatient and averse to hard work.
"There's been more competition than we expected," said Brokenicky, whose institution also operates branches in Manhattan, Junction City and Marysville.
"There is more competition on rates, which of course is good for the consumer although it narrows the profit margins for the institution," he said.
When the influx of new banks began four years ago, Lawrence already was served by First National Bank, Douglas County Bank, Lawrence National Bank, The Bank of Kansas/Lawrence and two thrifts, Capitol Federal Savings and Columbia Savings.
None of the newcomers says the Lawrence marketplace was being poorly served. Rather, their motive was to share in the volume of lending business being spun off by Lawrence's growth.
THE NEW arrivals say they've generated some of their business from new firms and development in the community. But cracking the Lawrence market inevitably means the newcomers must work to woo business away from established institutions.
"If anything," Sutherland said, "I think we were a little surprised at the difficulty at getting people to move, to end long-standing relationships."
Brokenicky said his institution also had come up against a number of potential customers who remained loyal to an existing Lawrence bank.
"Others we found very receptive to our overtures," he said.
Phil Haskell, who heads Emprise's Lawrence branch, said that as the most recent arrival in the highly competitive environment, he knew he'd have to nurture relationships with prospective customers.
"It's never easy to take somebody else's customer," he said. "We don't go out and make a call and the next day they're your customer. That's a process that takes time."
JOE KELLY, president of Douglas County Bank, said that any difficulty the newcomers encounter getting customers to jump ship is a positive reflection on the established banks.
"I think that just proves that the existing banks have been doing a good job of serving the community. It's tough to move a satisfied customer," Kelly said.
Although Kelly says the existing banks already were competitive and haven't altered their strategies over the past few years, his new rivals say they believe that attention to rates and service has been turned up a notch.
"We have definitely brought some competition," said Haskell at Emprise, which does quite a bit of commercial and construction lending.
"We have come in here with a very competitive interest rate structure," he said. "That probably has had an impact on pricing structures" at other banks.
Haskell said the bank has not been shy about approaching potential customers.
"We have had a very aggressive calling program," he said. "The other banks obviously have to be aware of that."
SUTHERLAND at UNB said he also perceived a competitive impact not only on the established competition's interest rates but also in such areas as pricing, service charges and marketing strategies.
"I don't mean that in a negative way," he said, noting that he didn't believe there had been a lot of fat in the other bank's margins. "We've changed since Emprise and Bank IV. We're just more competitive."
FirstBank has been especially aggressive in advertising its deposit rates. Although Brokenicky said the savings bank, which sees itself as an agressive lender, continually needs to attract deposits to fund its loans, that isn't part of a strategy aimed at Lawrence.
"We don't differentiate our rates in one market over another," he said. "We don't think that's fair to our customers."
THE LOCAL market may be competitive now, but it's likely to heat up even more, Haskell said.
"We feel like our timing was excellent. We would not want to be coming in next year when all the changes take place," he said, referring to the start of interstate banking in July.
"There will be some activity when that occurs," he said, noting that so far no out-of-state banks have announced plans to enter the local market.
"There's a lot of speculation," Haskell said. "I think you can count on some of the larger Kansas City banks coming in."
Emprise, which operates banks in 16 markets besides Lawrence, already is thinking ahead to that possibility, he said. "We have consultants who talk about what to expect."
ALTHOUGH all four banks provide a full-range of services to consumers and business customers, each has specialties it sees as its market niche. Those niches reflect the kinds of opportunities that are available in Lawrence more so than in many other Kansas communities.
Emprise is particularly interested in making loans to businesses and developers.
"Our bank knows how to make commercial loans," Haskell said, citing his own 25 years' experience as a commercial lender and Emprise's experience in other markets, such as Wichita.
If FirstBank has a target market, Brokenicky said, it would be in single-family and mutlifamily residential loans "in particular a focus on construction lending."
Although the risks are greater, there usually are fewer players in that market, Brokenicky said. "It takes a higher level of expertise; it's more labor-intensive," he said.
At UNB, which abandoned its savings bank charter to be able to do more kinds of lending, particularly in the commercial area, Sutherland said the bank hasn't turned its back on the market it tapped as a thrift.
"I think we're more equipped (than other commercial banks) to handle single-family mortgage lending," he said.
Vickie Randel, who heads Bank IV's Lawrence branch, could not be reached for comment.