Editor’s Note: BankBeat Editor at Large Jackie Hilgert compiled a summary of the events that shaped community banking this year for the December BankBeat magazine. This is the third in a five-part series chronicling her work. The first and second parts were posted Dec. 2 and Dec. 9, respectively.
In May, Don Musso, president of management consulting firm FinPro, stood in front of a couple hundred bankers at the Bank Holding Company Association Spring Seminar and proclaimed that a half dozen smaller banks would fail before Memorial Day. Our coverage of Musso became one of BankBeat’s most clicked-on stories of the year, because everyone slows their car when they approach a roadside wreck.
As it turned out, Musso was incorrect. Only two banks failed in 2024: Philadelphia-based Republic First Bank failed in the days prior to Musso’s bold statement. That failure cost the Deposit Insurance Fund $667 million and was attributed to trouble in the bank’s bond portfolio.
The First National Bank of Lindsay, Okla., failed in October. This failure, attributed to (you guessed it) fraud, resulted in a $43 million dent in the DIF. Neither of these losses generated national headlines or hinted at structural problems in the industry, which is shrinking in number when factoring physical locations only.
Bank branches, once an integral part of Main Streets, have been closing at a rapid rate, particularly since the pandemic. Certainly, the ubiquity of online banking has diminished consumers’ reliance on bricks-and-mortar branches. Yet commercial banking has been somewhat of a bulwark in the decline of physical branches, at least giving community banks a pathway to new markets or a way to conduct outreach in innovative or surprising ways. As BankBeat analyzed the stories of banks’ organic growth through establishing new branches, it can only conclude that the so-called death of the branch is the result of inaccurate reporting. Here are some notable examples:
St. Cloud, Minn.-based Stearns Bank looked 80 miles to the southeast, to St. Paul, when it decided to open a loan and deposit production office inside HmongTown Marketplace.
The branch offers culturally-nuanced financial services for the Hmong community, including loans, equipment financing, bank accounts and other services. Heather Plumski, chief financial and strategy officer for the $3.2 billion Stearns, said it was looking to “create tailored and easily accessible banking solutions” for Minnesotans of Hmong descent. There are 95,000 Minnesotans of Hmong descent who have a combined buying power of $165 million, according to the bank.
HmongTown Marketplace was founded 20 years ago as the first Hmong-owned and operated indoor-outdoor market in the United States.
Meanwhile, St. Paul’s Sunrise Banks, which is headquartered in an area of Minnesota’s capital city with a significant Hmong population, looked to Sioux Falls, S.D., to open its first retail branch outside of its home state.
“Sioux Falls is a growing, progressive community with many opportunities for customers and businesses to thrive,” said Market President Damon Sehr. “We feel there’s a lot of correlation between those factors and our own mission and values at Sunrise Banks.”
The branch offers account-opening services along with mortgages and business loans. Sunrise Banks is the only certified B Corp operating in South Dakota and the only Community Development Financial Institution bank in either South Dakota or Minnesota. The branch joins Sunrise Banks’ fintech offices, which have operated in the Sioux Falls area for more than a decade.
Marshfield, Wis.-based Forward Bank headed to that state’s northwoods to open a branch in St. Germain. The branch, more than a 2-hour’s drive from the main office, opened in July and relies heavily on technology, including an interactive teller machine and enhanced virtual assistants greeting customers and working through transactions.
“The integration of technology such as enhanced virtual assistants paired with great people will be key,” said Northwoods Market President Jake Weinand. Forward Bank also recently acquired the $75 million Lake City Federal Bank, its first foray into Minnesota, increasing its total branches to 15.
Indiana’s Centier Bank went on an expansion tear in 2024, with two new offices opened in the state’s largest city of Indianapolis, and two additional offices expected to open by year-end.
CEO and board Chair Mike Schrage acknowledged the trend his bank was opposing. “In a time where bank branches are disappearing and personalized service is declining, we remain focused on the community banking approach for which we have been known and celebrated over our 129-year history,” he said.
Fargo, N.D.-based Bell Bank is among a growing number of Upper Midwest banks to plant their growth strategies in the desert southwest. Bell Bank opened its fourth Phoenix metro area branch in 2024, this one in downtown Glendale, Ariz., where several employees speak Spanish.
Bell’s branch is housed in a building that is listed on the National Register of Historic Places. Dee Jimenez, Bell Bank Mortgage’s producing area manager in Glendale, called the branch “a huge initiative. We wanted to make sure we could give all of our customers an opportunity to understand the lending process and hopefully make homeownership a reality for all.”
Sometimes, a branching strategy is part of a wider goal. Suburban St. Louis-based Midwest BankCentre opened its first full-service, cashless bank last year in the north St. Louis metro city of Dellwood. The 1,800-square-foot branch opened inside of a formerly abandoned strip mall and includes an interactive teller machine along with three bank staff. Executive Vice President for Community and Economic Development Wes Burns said the branch is important both as a way to help the underserved community and to test innovative products.
Burns sees the branch as especially needed as there were 35 payday lenders providing capital to consumers at upwards of 400 percent APR within a five-mile radius of the branch. More than a quarter of Dellwood’s population reportedly lives below the poverty line, more than double the national average of 12.6 percent.
Midwest BankCentre also played a major role in financing the broader renovation project for the former strip mall. The bank lent $5.75 million to local nonprofit Refuge & Restoration to transform the 90,000-square-foot mall into a community center, complete with an early childhood learning center, behavioral health and addiction facility, and workforce and career development center.
The community has welcomed the innovative branch. The project was part of Midwest BankCentre’s five-year commitment to lend an additional $200 million to the communities it serves.
And while branch expansion can be good for a bank’s financial fitness, the branching strategy being taken by First State Bank of Rosemount, Minn., might have the opposite effect on its employees’ health. That’s because the bank’s new branch, expected to open in early 2025, will share space with Sweet Kneads Rosemount Bakery and Coffee Shop. Invite us down for a cruller, will you?
Community bankers stay resilient, engage in creative outreach
A year-in-review focused on outreach by community bankers could fill volumes. Stories of bankers stepping up to lend a hand in their communities, or donate funds to youth sports, aid local nonprofits, build area health care facilities or boost arts initiatives are legion. Clearly, community bankers care about the people — their youth, their local small businesses, and even other bankers. Here are just a few stories that jumped out at us:
When communities in parts of the Upper Midwest suffered record flooding last summer, community bankers responded even as their own buildings were threatened. Flooding in northwest Iowa damaged nearly 2,000 properties and caused evacuations and disaster declarations. Some parts of the state received more than 15 inches of rain in June, causing water levels to rise and some levees to break. FEMA issued a disaster declaration for nine counties in northwest Iowa on June 24. According to the National Weather Service, the southeast South Dakota community of Canton received 18 inches of rain from June 20-22. Homes were washed away by rushing flood waters in North Sioux City, S.D. In south central Minnesota, the Blue Earth River destroyed the century-old Rapidan Dam, swallowing a small business and adjacent home.
Primghar, Iowa, received 4-5 inches of rain from June 19-21, noted Gerald Leng, president of Savings Bank in Primghar. The city sits between the Big Sioux and Little Sioux rivers in northwest Iowa. Crops sustained damage locally, and water damage occurred where sump pumps could not keep pace with the rising water.
Customers who live near the bank’s branch in nearby Hartley, Iowa, informed the bank of home damage. Though Iowa Gov. Kim Reynolds pledged grant money to help the region recover from flooding, Leng noted at the time that funding takes a considerable time to come through. To bridge the gap, the family-owned Savings Bank offered signature loans to customers and non-customers in the hope they would eventually qualify for grant money.
The city of Spencer, Iowa, was cut off from the rest of the state by floodwater on the night of June 22 as hundreds of residents were evacuated to two city shelters, noted Mayor Steve Bomgaars. The Little Sioux River reached a record 3 feet above its 500-year floodplain. Seth McCaulley, president of Spencer’s Community State Bank, estimated 40 percent of buildings in the community were touching river water as of June 25. A significant percentage of buildings had major sewer backups.
Community State Bank was the first bank to reopen in Spencer with limited staffing as it was the furthest from the Little Sioux River, McCaulley noted. The bank’s branch in Cedar Rapids, Iowa, sustained severe flooding. Several bank employees reported considerable damage to their homes.
Eventually the area dried out, life returned to normal, and bankers could focus on other initiatives, such as financial literacy. A few banks have put a modern spin on how they deliver education to increasingly tech savvy youth.
Social media is where Gen Z and millennials migrate to find “edutainment” and news, using it an average of 2 1/2 hours a day. More than 75 percent of Gen Z prefers to watch videos on TikTok over any other platform, and 95 percent of that generation uses Instagram daily, according to a survey by marketing company Her Campus Media, which focuses on Gen Z.
This means the need and opportunity for consumer financial literacy outside the classroom has significantly expanded. Nearly 80 percent of Gen Z and millennials say they have gotten financial advice from social media, according to a 2023 Forbes survey, but only 31 percent check the reliability of those sources. “There’s so much information out there — almost too much,” said Jacquelyn Benda, digital strategist at The First National Bank in Sioux Falls, S.D. When the bank was creating its TikTok presence, “we knew we had to be somewhat of a financial influencer” and share accurate, helpful information, she said. It appears to be working, as the bank’s videos on how to write a check and deposit a check have each been viewed more than 26,000 times.
The marketing department uses its own iPhone for creating and posting the videos, and Benda uses the bank’s larger content calendar to plan the social media calendar, which is part of its more expansive financial literacy strategy which includes emails, blog posts, employee social media posts, and school and community presentations. She then uses the HootSuite app to schedule the posts on each of the different platforms and check performance analytics.
The target audience for the bank and its content changes depending on which social media platform they are using. “TikTok skews younger,” Benda said.
In 2024, the bank made “a more concerted effort to share things that are focused around fraud” to help consumers protect themselves,” said Renata McCain, vice president and marketing manager for the $2 billion bank. “There’s a lot of room to grow there. Many only care when it affects them.”
Security Bank, S.B., of Springfield, Ill., is also on TikTok and gearing its financial literacy content toward college-aged students, according to Destiny Nance-Evans, senior vice president of culture and engagement for the $203 million bank. When deciding what content would be relevant to their target audience, a viral video posted by another bank simply explaining what a debit card is, proved to Nance-Evans that “financial literacy was needed on the platform.”