Back in the mid-1970s, the management at Financial General Bankshares Inc. asked Northern Virginia banker Milton L. Drewer Jr. to outline a detailed five-year plan for the bank he headed, and which Financial General controlled: Clarendon Bank & Trust.
The bank holding company was surprised when Drewer's plan proposed a merger of the three major Financial General institutions based in the Virginia suburbs of Washington. And when banking company officials suggested that they really hadn't asked for parent-company corporate strategy, Drewer emphasized in reply that they had asked for his best future planning.
Not many months passed before there was general agreement that Drewer's idea had considerable merit, partly because the people at Financial General were beginning to seek ways to take advantage of their unique marketing status in the Washington metropolitan area. No other commercial banking business here has operations in the District, Maryland and Virginia.
In April 1978, Drewer's proposal became reality when Clarendon Bank, Alexandria National Bank and Arlington Trust Co. were combined to form First American Bank of Virginia. Overnight it became the largest bank in the Northern Virginia suburbs of Washington, and the fifth-largest bank in the metropolitan area.
Profits increased, too. Reflecting the efficiencies of merged operations and aggressive marketing for the exploding corporate and trade assiciation business base in its market area, First American of Virginia profits jumped 27 percent last year to $8.2 million, for a return on average assets of 1.08 percent.
Now, with Financial General banks in the District and Maryland also doing business under the First American name, the banking firm has begun an aggressive marketing ccampaign that is helping boost business at each of the banks. Automatic teller machines throughout the region, using the title Money Exchange, have brought the day of true regional banking much closer by allowing customers of one bank to make withdrawals from machines across state lines.
It's all part of a revolution in banking, as smaller institutions are consolidated into larger financial centers that can help meet the big loan demands of expanding corporations.
But Drewer, now president and chief executive at First American of Virginia, always has emphasized that there is a consumer side to his business -- called retail banking in industry parlance.
He parts ways with some colleagues in the industry who want to shift consumer business across the street to savings and loans or credit unions that will have broad new checking and lending powers as of Jan. 1.
Drewer has another vision, one that incorporates continued attention to consumer needs, as well as a new focus on bringing to the regional business community the type of money-center banking operations that aid the economies of such cities as Chicago or New York.
"I see a real need and a desire for consumer banking. It's a good business, and how can you have a corporate business and ignore the people who work for the corporate customers?" Drewer says. "I see a necessity to provide more services, and make them easier to get to . . . you have to prove to a corporation that you will provide for employe needs."
The First American chief sees no dramatic shift in customer funds or loyalties on Jan. 1 just because all S&Ls and banks will be placed on the even competitive footing of being able to offer checking accounts and pay interest on checking balances.
"We have been in checking accounts and we ought to be able to do a better job . . . In the consumer loan area it's really conpetitive, but we know the business," he stressed in an interview.
At the same time, Drewer observed that the S&Ls will be learning and banks won't have their initial edge forever, saying, "We'll keep business, and get new business, based on what we have to offer: convenience, the Money Exchange machines, services we provide from the consumer standpoint."
Typical of Drewer's approach is residential real estate lending by his bank. Many commercial banks shun home mortgages in large volume because they do not want to tie up their funds for many years at fixed rates. But Drewer has been making such loans since 1965 and doesn't turn down qualified customers. He figures it's good business, because real estate is so important to the Northern Virginia economy and "there is a great need for permanent mortgages."
Figures tell the story: At the end of 1979, First American of Virginia had real estate mortgage loans outstanding of $218 million, plus construction loans of $47 million in a total loan portfolio of $491 million.
More recently, Drewer's bank launched another innovation aimed at attracting consumers: "simple interest" computation on loans. The major feature of this system is that consumers pay interest only on the unpaid principal balance and only during the time a loan is used, as opposed to the normal method of precalculating interest charges on the entire amount for a fixed loan term. There is no prepayment penalty with this arrangement, which is similar to the loan agreements businesses get from banks.
Like corporations, individual customers are being given a better chance to direct their own financial planning.
And Drewer is into courting business customers, too.
"I see us as being a very strong corporate bank, " he explained. "People seem to be amazed by how we've progressed so well since the merger. We are increasing our market share in Northern Virginia and making more money at it than we did as three individual banks. In 2 1/2 years, net new accounts have increased 60 percent."
The First American Bank president knows his 42 branches are located throughout the expanding Virginia sectors of the Washington region (two more will open soon, in Reston and Fair Oaks Mall), and he is convinced that recognition as the biggest bank in this market will bring in corporate business -- as long as the bank has the people and cash management, fund management and loan services to warrant it.
"It is necessary that the Washington area be known as a money center . . . we will have to hustle in the banking industry to take care of the needs, but we must do away with the belief that you have to go to New York to get what you need," Drewer emphasized. "It will take time, but we are going to have larger institutions -- and will do it."
Financial institutions of sufficient size to cope with large business needs will be important in helping Washington develop as a center for corporations that are not dependent upon government for growth.