Profiles of financial institutions: Their role and performance in the regional economy of the urban marketplace

The interaction of bank and thrift branches with their host neighborhoods is examined using a data set of savings, lending, transaction, staffing, and facility characteristics for all 620 branches of the 71 financial institutions operating in Tampa Bay, Florida. In addition to this performance information, site location, facility configuration, service level, and age are also surveyed for every branch. This banking information is matched with socioeconomic, demographic, land use, retailing, and bank competition data assembled on a square mile, section level basis for metropolitan Tampa Bay.;The study explores branch performance across a variety of dimensions by county, institution size, bank/thrift, branch environment, and competition intensity. The study includes a discriminant analysis model to forecast individual branch performance using branch environment and institutional factors as well as substituting neighborhood profiles for socioeconomic, demographic, land use, retailing, and competition data.;A primary prerequisite of the research is the creation of a neighborhood classification system for the entire metropolitan area. A discrete group of seven neighborhoods types is created which forms the "securities" in a portfolio analysis measuring branch network performance efficiency. The percentage of an institution's branches located in each of the seven neighborhoods types represents the branch portfolio. Both a spatial and a temporal portfolio analysis is employed to determine the performance efficiency of the various branch portfolios associated with local, state, regional, and money center institutions. The performance efficiency for the existing branch networks of these various institutions is shown to be inferior to more equitable networks with more branches in older urban neighborhoods.;The study finds that the dictates of the Community Reinvestment Act and other bank regulations aimed at the public policy concern of equal access to credit and financial services have been superceded by expediency. Despite their diminished role, public policy objectives ought to be accomplished by an enlightened private sector. Investment diversification and branch networking throughout every neighborhood, including older urban areas, is in the best interest of those banking managers seeking an efficient portfolio of branches. In this case, efficiency fosters equity.