As electronic banking takes hold, one town isn't ready to give up its local bank
In 2013, at the height of a painful divorce from School Administrative District 58, the town of Eustis also learned it was going to lose its only bank, Camden National, that June.
It was a tough one-two punch. So, when resident Susan Fotter found out a month before the bank was due to close that Skowhegan Savings Bank was coming to town, she cried. Skowhegan Savings bought five Camden National branches that were closing in Franklin County.
“I will be forever grateful to them,” she said Tuesday.
But things change.
Now Fotter, the owner of Fotter’s Market, heads a committee that is trying to find another bank to come to the town of 600 after Skowhegan Savings announced earlier this month that it’s closing five branches, including the one in Stratton, which is a village of Eustis. Others are in Phillips, which the bank also bought from Camden National in 2013, in Pittsfield and two in Skowhegan.
Skowhegan Savings is closed the branches for the same reason Camden National did in 2013: Because of an increase in electronic banking, the branches don’t do enough business.
Online vs. bricks-and-mortar
“It’s an evolution in the financial world,” said Lloyd P. LaFountain III, supervisor of the state’s bureau of Financial Institutions. “It has to do with what makes sense.”
He said that the trend is not unique to Maine, and the branches that are closing aren’t just in rural areas. But he said it’s felt more in rural areas, where the next bank branch may be a few towns away. He said many of the financial institutions that close branches, Skowhegan Savings included, offer electronic banking in its place that can perform many of the functions of a brick-and-mortar bank, including check deposits
“More and more we’re seeing an online presence, it’s more prominent,” he said. “You really don’t need to enter a brick-and-mortar bank to do many banking functions.”
The bureau, which oversees Maine-chartered banks and credit unions, in its report to the Legislature in January, said six bank branches closed between Nov. 1, 2015, and Oct. 31, 2016. Five of those were Bangor Savings Bank branches — in Howland, East Millinocket, Farmington, Hartland and Portland. Bar Harbor Savings also closed an Augusta branch.
Since that report, Bangor Savings closed a branch on Capitol Street in Augusta, and Katahdin Trust Company closed branches in the Aroostook County towns of Easton, Limestone and Washburn.
No branches closed during the same period from 2014-15; one closed in 2013-14, two in 2012-13 and two in 2011-12.
LaFountain said that some “closings” don’t show on the list, because the branch was moved or acquired by another bank, like the Camden National branches in 2013. Two banks opened branches between Nov. 1, 2015, and Oct. 31, 2016, in Portland and Brunswick.
Branch closings are a business decision based on a bank’s strategic plan, he added, and not all banks follow the same plan. “It’s not that all banks are looking to reduce their footprints,” he said.
Millennials having an impact on the trend
As of June 30, 2016, with 105 financial institutions chartered to do business in Maine, bank assets increased from $16.3 billion to $17.3 billion over the previous year, and credit unions increased from $1.8 billion to $1.9 billion, according to the report.
LaFountain said many times when a branch closes, there are other banks nearby to pick up the customers who want to do business in a bank.
“In York County, where I live, branches have closed in Acton, Shapleigh, Hollis and Limerick,” he said. “But Limerick is 10 miles outside Cornish, which has branches, and Waterboro, which has several.”
Banks have found millennials, in particular, don’t use their branches at all, but rely on online and electronic banking. “That’s not just in the financial industry,” he added. “It’s in a lot of other areas. The post office, stores.”
He said that the lack of a bank building in a town isn’t a crisis. But he agreed that traveling and electronic banking, can be a hardship for some. “It’s an issue for the population that may be older and not using technology at all, or as much.”
Eustis reaching out to other banks
In an interview with Mainebiz last November, Skowhegan Savings CEO John Witherspoon said that more than 50% of the bank’s transactions occur either on a mobile device or online, adding that that the bank had recently added mobile deposits.
He also acknowledged the challenges facing the traditional face-to-face business model for banks, noting that even with the expanded use of online technologies remaining connected to customers is important.
“But our business model relies on personal relationships,” he said. “Although most banks rave about their service, we back it up by answering all calls to the bank with a live person. And 95% of the time, that person can solve the needs of the caller. Hopefully the world will still value that going forward. If it doesn't, the relevancy of any community bank going forward is going to be put into question.”
Residents of Eusitis, which is in the western mountains, the last town on Route 27 before Canada, would have to drive 20 miles southwest on mountain roads to get the closest bank, in Rangeley. Fotter said that can be a tough drive in the winter.
Skowhegan Savings is training customers to use the enhanced ATM that will replace the bank branch, but Fotter said many of the elderly in the town of 600 don’t feel comfortable with technology.
“We’ve got to find a solution that can work for 100% of our population, not 50%,” she said.
The committee, formed at the Sept. 25 selectmen’s meeting shortly after the Skowhegan Savings announcement, didn’t waste any time finding that solution. Fotter says they approached several financial institutions and have found one that’s seriously considering locating in town.
“I’m optimistic,” she said Tuesday. “I expect good news. I don’t know when, but I do expect good news. Put it this way, I’m not going to quit until we get good news.”
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