Sometimes we have to count our blessings. And this is one of those times. At Bauer, we are fortunate to have 41 banks with branches located in the same zip code as our main office in Coral Gables, Florida. Many of them are within walking distance.
That gives us a tremendous variety and the opportunity to choose a solid bank that fits our needs. Many Americans do not have that luxury. In fact, there are well over 2,000 U.S. census tracts (each averaging roughly 4,000 residents) that are considered to be “underserved” by the banking industry. That translates to eight million Americans lacking access to a bank locally.
Granted, some people prefer to live in remote areas and lack of local services is part of the deal. But that’s the minority. Other areas that are underserved generally have high poverty, high unemployment and possibly a population decline that has caused banks to close branches. The fact is, only five states are considered to be fully served. They are: Connecticut, Delaware, New Hampshire, New Jersey and Rhode Island. All other states are lacking.
The Community Reinvestment Act (CRA) rewards banks for assisting residents within its “assessment area” but assessment areas are limited and often exclude these underserved tracts. What we saw during the height of the pandemic, however, was that local branches became increasingly important, especially to the un or underbanked.
The government-issued stimulus was much easier to get your hands on if you had a bank account nearby. And we at Bauer were very pleased to see strong community banks step up to help their neighbors in that time of need.
Since January 1, 2020, more than 50 U.S. banks opened new branches in (or near) these underserved tracts. Most were community banks. Those rated 5-Stars or 4-Stars (i.e. Recommended by Bauer) are listed on page 5.
The first on the list, 5-Star Citizens State Bank, Ouray, CO, (or CSB) was established in 1913. It sits at an elevation of 7,800 feet surrounded by the picturesque San Juan Mountains. For the majority of its 110 year history, CSB has been the only bank in the town of Ouray.
In 1980, CSB opened a second location to serve Ridgway (also in Ouray County and also with few choices). Since then, it has added three more, all in towns that have little or no other bank presence. The most recent was in Telluride (Nov. 2020), in the midst of the pandemic.
Being present isn’t enough, though. In the spirit of a true community bank, CSB is a funding partner with several local foundations, including the Telluride Foundation:
“Partnering with people and businesses to make the communities we serve successful today and sustainable tomorrow.”
That is the spirit of community banking. Now, we would like to report that all of the banks on page 5 really opened “new” branches. But we can’t. In some cases, the branches were acquired from another institution.
That was the case with 4-Star Stock Growers Bank, Forman, ND. On September 12, 2020, the former $67.6 million asset, single-branch Stock Growers Bank, Napoleon, ND merged into Sargent County Bank, Forman, ND, which had assets of $201.7 million. This transaction brought Sargent County Bank into a third county. As it now was serving Sargent, Ransom and Logan counties, it made sense to adopt Stock Growers Bank’s moniker.
We will never know for sure, but had Sargent County Bank not stepped in, the town of Napolean, ND may have stayed without any bank branch when the old Stock Growers Bank closed shop.
Employees of Stock Growers Bank, old and new, have a history of being active in civic, church and community organizations. In fact, former president and Chairman of the Board, Gilman Klefstad, served as both a state representative and later as Senator to the North Dakota state legislature. That’s certainly one way to effect change.
A similar thing happened in Almena, Kansas, in October 2020. When Zero-Star Almena State Bank, Almena, KS failed and was closed by regulators, 5-Star Equity Bank, Andover, KS, was the winning bidder. In addition to assuming all of the failed bank’s deposits, Equity Bank took over essentially all of its assets, including the two branch offices.
The branch in Almena, Kansas remains the only bank operating in that small town. The nearby Norton, Kansas branch, however, has lots of company. This transaction, like the previous, did not result in a new branch operating in an underserved area, but they both preserved bank branches in towns that would (or may) have been left without one.
In some instances, a town without a bank branch is simply an inconvenience. But in many cases, it means hours on the road. Even today, with digital payments, cyber-banking and photo deposits, it’s good to have a bank you can actually go into when the need arises. It’s even better to have a choice in banks.
The United States is losing bank branches at a rate of between 2 and 2½% per year. The biggest culprits are those beholden to their shareholders instead of their communities.