The trend in Oregon banking has been unmistakable: Consolidation within the state’s banking industry is happening at a furious pace. The result of all those mergers and acquisitions, in addition to the toll taken by the Great Recession, is a whittled down field of Oregon financial institutions that can truly lay claim to the term “local.”
In 2006, 36 banks were chartered in the state, according to data provided by Oregon’s Department of Consumer and Business Services. That number had been cut nearly in half by the end of 2016, dwindling to just 20. Interestingly, the number of credit unions in Oregon has remained steady at 21 over the same time period.
Central Oregon has hardly been immune from the rampant pace of banking consolidation. Most recently, Bank of the Cascades was acquired, and with that acquisition another trusted and familiar local name was lost. But the loss of true community financial institutions is an issue that stretches far beyond Oregon’s borders.
The spike in mergers and acquisitions in the banking industryhas numerous reasons, including a changing regulatory environment that has helped spur momentum. And as long as the economy thrives, larger banks rich in cash will look for opportunities to grow by acquiring smaller banks. The same does not typically hold true for credit unions, whose member-owned, not-for-profit model makes them a less likely target for mergers or acquisitions.
The loss of these “local” financial institutions does matter. There’s a level of service, comfort, and familiarity that comes from doing business with local businesses. Regardless of whether it’s a grocery store, a restaurant, a boutique, or a bank, there’s also the satisfaction of knowing we are supporting the local economy, helping provide jobs, and keeping local money in the community.
Credit unions, community banks, and larger banks offer almost identical services, but there are differences in the way they do business. For local credit unions and community banks, relationships are the key. Consumer banking customers receive more personalized service at branches that are typically more intimate, and every decision is made locally by people who live and work in the community.
Most credit unions and community banks established themselves by adhering to this community-based approach, and for generations that approach has helped them remain independent and successful.
For business banking customers, local financial institutions tend to focus on the small businesses that fuel the local economy. Business decision-makers work directly with the financial institution’s decision-maker. This makes for quicker and more streamlined decisions than most will find at any far-flung financial institution.
National data shows that credit unions in particular tend to have substantially lower average fees than large banks, are more likely to offer benefits like free checking, and on average offer better interest rates on anything from savings accounts to car loans to credit cards.
Simply put, the success of a local financial institution is forever tied to the success of the community it resides in. So it is as vested in the local area as the members or customers it serves.
The good news is that even with the most recent merger, strong local financial institutions remain committed to serving their members and customers as well as the community that we all share. It’s the same community-based approach that has always been the blueprint to their success.
The choices may be fewer, but thankfully, local credit unions and community banks will continue to offer a trusted option for those who prefer a truly community-based financial institution.
Mike Stanley, Central Oregon Area Manager, SELCO Community Credit Union, mstanley@selco.org
