Community bankers have identified their toughest competition, and it’s not the megaplayers that want to put a branch on every corner.
Community bank executives say it is other community banks that pose the biggest threat to their business, according to a nationwide survey of bankers by Grant Thornton International.
Seventy-seven percent identify community banks as their competition, followed by 64 percent listing credit unions as the major concern. Large regional banks come in third, with 45 percent calling them significant competition.
In a 2001 survey, the megabanks were also called a threat by 45 percent. But that year brokerage firms topped the list, with 66 percent calling them major competition.
Community banking trends are followed closely in Illinois because the state is home to so many such banks. For decades, quirks in Illinois law prevented rapid bank expansion, allowing a thriving community network to put down deep roots. Even in an era when banks can grow rapidly across a region and jump state lines, community banks remain strong.
Statewide, the findings in the survey closely tracked the national results. In Illinois, 83 percent of those surveyed called other community banks a threat to take away business, while 52 percent listed credit unions as a concern.
The consolidation under way among some of the larger regional banks will open up opportunities for community bankers, the study found. The merging institutions often have some overlap and need to sell off some branches.
Bankers apparently are anticipating some of those opportunities: While just 8 percent of community bankers say they expect to acquire another bank this year, 30 percent say they may make such a move during the next three years.
The top challenge facing community banks is the same one many industries struggle with: keeping good workers. Ninety-three percent of those surveyed listed “retaining key employees” as crucial to continued success.
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Credit unions grow: Those community bankers who called credit unions a threat may be on to something. New data show credit unions’ loans and savings both grew rapidly last year.
In 2003, the assets of federally insured credit unions grew 9.5 percent, to $610 billion. The value of loans increased 9.7 percent, to $376 billion. Credit union membership rose 1.8 percent, to 82.4 million.
Last year’s results “show that the credit union industry’s safety and soundness position remains extremely strong and well-positioned for the year ahead,” said Dennis Dollar, chairman of the National Credit Union Administration.
Insurance savvy lacking: Automobile owners are more likely to know how many cylinders their engine has than how comprehensive their insurance coverage is, a recent survey of car owners found.
The survey by the Progressive group of insurance companies found that 91 percent of new car buyers know how many cylinders are under the hood, and 98 percent know what kind of transmission the car has. But only 49 percent knew what kind of bodily injury liability coverage they carried for one person.
Progressive also released its list of the most and least expensive new vehicles to insure. The most costly is the Dodge Viper, followed by the Acura NSX and Jaguar XKR. The least expensive is the Oldsmobile Silhouette.