Some bank-industry watchers have long predicted the demise of the local branch, but two credit unions and one bank that are building new facilities in Council Bluffs are quick to throw water on that idea.
Each institution’s motivations vary, but each makes one thing clear: The physical branch model isn’t dead.
Officials with Omaha-based Centris Federal Credit Union, the second-largest credit union in the metro area, say its members have clamored for a second Bluffs branch for more than a decade. They’ll get their wish when the organization opens a new 3,000-square-foot branch at 520 E. Broadway in the spring of next year.
TS Bank, which opened its first Council Bluffs branch in late 2005, will open its third local branch on the ground floor of a four-story, 20,000-square-foot office building at West Kanesville Boulevard and South Main Street. That building is set to open in August next year and will house the bank’s growing commercial banking, trust and wealth-management departments. Two other tenants will lease two floors of the building.
And Veridian Credit Union, the second-largest Iowa-based credit union, is raising its debut Bluffs branch at 21st Street and West Broadway. That 6,880-square-foot facility will be open in the spring of next year and is the first of as many as 12 branches across the Omaha-Council Bluffs metro area and southwest Iowa, officials said.
Traveling east into Iowa from downtown Omaha, it’s clear that Broadway and Kanesville Boulevard is a business district, so it makes sense for financial institutions to locate on the thoroughfare, said Bancography’s Jamie Eads.
Eads, who is senior project manager for the Birmingham, Alabama-based financial institution consulting firm, said competition for banking business is dense along the corridor. That makes growth difficult, but planting a flag there is important, she said.
“In general, I think it’s institutions coming in because it’s a good, stable market,” Eads said. “If (financial institutions) are near Omaha and not in Council Bluffs, then they need to be.”
Meanwhile, the number of bank branches in the U.S. is at a 10-year low, according to various analyses of federal regulatory data from researchers including SNL Financial.
Recent research from Sageworks Bank Information showed the number of U.S. bank branches declined 3.5 percent to 95,000 in 2014 from more than 98,000 in 2010.
Over that same period, the number of Nebraska bank branches remained virtually flat; there were 1,090 bank offices in the state as of June 30, 2014, the most recent date for which data is available.
Iowa lost 38 bank branches over that period, meanwhile, a 2.3 percent decline in bank branches that left it with 1,583 as of June 30, 2014.
The explanation is simple enough: Where bank customers and credit union members once had to travel to the nearest branch to deposit a check, for instance, that task and many others can be completed using mobile technology or newer ATMs.
But member-owned credit unions and privately or shareholder-owned banks are two different animals, which helps explain why the number of credit union branches in Nebraska actually increased about 7.6 percent to 142 today from 132 in 2010, said Dan Collins, vice president at the Nebraska Credit Union League.
Because credit unions operate as nonprofit institutions, they share profits with members and can sometimes charge lower fees and offer higher interest rates on member accounts than competing banks. Some banks and industry groups say credit unions operate at an unfair advantage due to various federal and state income tax exemptions.
Federal regulatory data and other reporting shows credit unions in the U.S. also grew in number of branches by about 4 percent, to 21,948, from 2010 to 2014; state-level credit union branch data for Iowa was not immediately available.
Membership at Centris is up about 25 percent over the past five years, and Dawn Gonzales, the credit union’s vice president of community development, said the new, larger branch will better accommodate increased traffic in its other location in Council Bluffs.
“If you get more than five people in here, it’s pretty packed,” Gonzales said.
On the other hand, TS Bank Chief Executive Josh Guttau said his family’s bank based in Treynor, Iowa, wouldn’t have built a new Bluffs branch at this time if it didn’t need more space for departments outside of its retail operations. If it had, he said it certainly wouldn’t have put up a 20,000-square-foot building around it.
“Had it been a stand-alone retail branch, it would’ve had a smaller footprint like our (1,700-square-foot) West Broadway branch,” Guttau said.
Meanwhile, Veridian’s new location, at almost 7,000 square feet, will be a sort of local flagship for the organization in a metro area with which it is already familiar.
Jay Ferris, president of Veridian’s western region market, said the credit union has made about $130 million in indirect loans to metro-area car dealers in the last three years.
“We service the loans out of our corporate office in Waterloo, Iowa, but the dealers have always asked us when we’re coming to Omaha,” Ferris said. “It’s huge for us to have the branch here.”
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