Banking is a billion-dollar business in Durango, and it’s getting bigger.
According to Federal Deposit Insurance Corp. numbers from June 2015, there was $1.1 billion in total deposits in the nine banks doing business in Durango.
The FDIC’s latest total deposit numbers for area banks aren’t available yet, but since last summer, Four Corners Community Bank has opened in Durango.
That makes Durango somewhat contrarian to national banking trends, but one local banking executive believes Durango’s banking community is unusual.
“I would say that it’s a very competitive market. ...There are probably a larger number of banks than perhaps comparable populations,” said Steve Short, president of the board at First National Bank.
According to the June 2015 numbers, about half of the local deposits were held by Wells Fargo, leaving about $568 million for the regional and community banks in town: Bank of Colorado, Bank of the San Juans, Alpine Bank, First Southwest Bank, Pine River Valley Bank. Community Banks of Colorado, First National Bank of Durango and Vectra Bank Colorado.
Traditional community banks use deposits to fund loans, so the money spurs economic growth where the depositors live, said Kent Curtis, CEO of First Southwest Bank. But larger banks do not follow the same model.
“That does somewhat of a disservice to the local community, because those dollars are being used someplace else,” he said.
Even though Durango’s remote geography has likely kept some larger banks from setting up shop, the market has gotten tougher for smaller banks, he said.
“Today you get your car loan at the car dealership, you get your mortgage loan online, and really there is not a lot business left for community banks,” Curtis said.
The new compliance costs associated with some loans, such as mortgages, which were put in place by the Dodd-Frank Act, create a new hurdle, said Amanda Averch, a spokeswoman with the Colorado Bankers Association.
“There are a lot more steps and disclosures that banks are dealing with now,” she said.
Larger banks have hired attorneys and other staff members to keep banks in compliance, and that is a cost that is tougher for smaller banks to absorb, she said.
So instead of competing with large banks on mortgages and credit cards created for the masses, some community banks are tending to specialize more in small-business and construction lending, Curtis said. Construction lending requires on-site monitoring, and business loans are less regulated than consumer loans.
So banks can compete on lower interest rates and pricing, depending on the risk they are willing to accept, he said.
Despite the competition, Art Chase, president and CEO of Bank of the San Juans, said there is enough business for all the banks, considering the healthy annual deposits in town.
‘The trend tells you the economy overall has been expanding over time ” he said.
mshinn@durangoherald.com
