The game is changing, sometimes dramatically, as small banks become large banks, credit unions take over a niche territory and big banks look for bigger profits. The good news? Maybe it’s that at the smaller banks, “loan committees meet several times a week,” according to one banker.
“You can’t tell the banks without a program anymore,” says Warner Dalhouse, a retired bank CEO and founding board member of HomeTown Bank. “Even by historic standards, we’ve had a lot of changes in the past two years.”
Dalhouse should know. As president/CEO of Dominion Bank, “I bought 59 banks and sold one. We tried to buy the largest bank in town” in small localities across this region. At one time in the 1960s, he says, “there were 18,000 banks in the U.S. That’s 7,000 now.”
The banking landscape in the Roanoke Valley has been at a roiling boil for some time now. It has nearly boiled over in the past 18 months. Consider:
• The enormous Bank of America packed up and left Roanoke recently.
• Several other big banks – generally headquartered in North Carolina – have pulled back their Roanoke operations and are becoming less visible, less involved in local community leadership.
• Union Bank of Richmond recently bought StellarOne, increasing assets to $5.8 billion to become, “a bank with the size and reach that Virginians haven’t seen in nearly 15 years,” says CEO William Beale.
• Valley Bank has been sold to North Carolina Bank (NCB), leaving HomeTown Bank as the lone Roanoke-owned bank still headquartered here. The merger created $5 billion in assets.
• Credit unions are growing at an impressive rate, threatening community banks with their tax-exempt status and continuing to offer an alternative to small investors and businesses. Still, they are to big banking, what cable TV news viewership is to network news: a shadow operation.
When Dalhouse’s former employer, Dominion Bankshares, was sold to First Union in 1991, it had 56 percent of the market’s deposits, says Dalhouse, and nine other banks in the valley had the other 44 percent. He says Wells Fargo (“which is three or four owners removed from Dominion”) has 21 percent these days. “They’ve lost more than half of their share” in an intensely competitive and fragmented market.
Dalhouse is tough on the big banks and their Roanoke relationship: “The most dramatic development is that Bank of America has left town. SunTrust has closed its headquarters here and has a skeleton operation. BofA, Wells Fargo and SunTrust have made it clear that they are not interested in most of the accounts available in the Roanoke area.” They would argue to the counter, though their argument would be arguable.
Dalhouse says he became interested in starting a community bank (HomeTown) while listening to former First Union President Ben Jenkins say his bank “couldn’t make any money on accounts of less than $100,000. I thought, ‘That presents a hell of an opportunity’” for creation of an alternate source for those loans.
The Bank of North Carolina’s purchase of Valley Bank created a value of $5 billion in assets for the two banks. HomeTown Bank, by comparison, had $418 million in assets in September of 2014 and Freedom First Federal Credit Union $355 million in assets.
The declining interest of some of the bigger banks has resulted in HomeTown Bank “opening more accounts in the last six months than ever before,” says Dalhouse. “Valley Bank has gotten its share, too.” Freedom First’s Paul Phillips says that credit unions have benefitted, as well.
Dalhouse believes the small banks have a distinct local advantage: “It’s about availability, responsiveness, being friendly. Loan committees meet several times a week. We’re custodians of the community’s cash reserves.” There are 86 community banks in Virginia and 100 total banks headquartered in the commonwealth, according to the Virginia Bankers Association. Roanoke has 70 bank locations in the valley (topbanklocations.com/virginia/roanoke-banks/).