A Bank on Every Corner

Oklahoma is seeing a building boom in bank branches; with more than 1,200 built or planned statewide over the past decade.

Some bank officials are scratching their heads, wondering about a lack of good bank locations and possible oversupply of offices. Others welcome the competition.

Branch banks have increased so much in the Tulsa metro area that they rival the number of convenience stores.

While exact figures are not available, Tulsa’s banking market is hot, admits Roger Beverage, president of the Oklahoma Bankers Association.

Branch banking is a system where a head office is connected to branch offices, which provides financial services in different parts of a region.

Branches have been transformed from merely transaction processing centers into customer service and financial sales centers.

The transformation has helped banks achieve bottom-line benefits like retention of profitable customers, higher branch revenue, better staff productivity and lower operational costs.

Good Times Spur Growth

Success follows a growing economy, Beverage said.

“The same kind of thing is happening everywhere,” Beverage said. “Energy drives so much of the market. Overall, though, what you see is steady growth and expansion.”

Several industry observers and market insiders agree.

“The Oklahoma economy in general and Tulsa’s economy in particular have improved significantly in the past few years,” said Tom Bennett Jr., chairman and CEO of Tulsa-based Oklahoma National Bank.

“More people want to participate in the economy, and more banks want to open in the Tulsa metro area,” he said.

Banks are expanding like any other business during good times, said Bob Ball, economic research manager with the Tulsa Metro Chamber of Commerce.

“In a good economy, other businesses expand when they do well,” he said. “Banks are making those kinds of moves just like any other business.”

William Berry of American Heritage Bank agrees.

“It certainly appears that a lot are going in,” said Berry, who is chairman of the Sapulpa-based company. “It is becoming more and more difficult to find underserved areas of Tulsa.”

Banks look at various branch opportunities, Berry said. “It is the best way for banks to grow.”

Time to Branch Out

In metropolitan areas, bankers see the opportunity to expand their customer base and generate revenue, Beverage said. “All this competition is good for consumers because, for one thing, it increases choices.”

“When there is only one entity — bank or financial services entity — then people are limited,” he said.

Convenience and customer service are two other reasons for building branches, Bennett said.

“Most banks, when they are in a community with a branch, get to know their customers and call them by name,” he said. “People want that personal touch.”

If someone sat very long in a bank lobby they would see all sorts of depositors — and one type would likely be large-CD holders who are generally older people, Bennett said.

“They have saved money all their life, and when they come in they want that personal attention. They want to go somewhere where they are known by their name,” Bennett said.

There are two sources of opportunities, Berry said, the high growth areas and the under-served areas.

“If you can find both in the same spot, that would be a great location,” Berry said.

But those locations are difficult to find.

“What happens is banks see a high-growth area and everyone is trying to establish a foothold,” Berry said. “I hope it does not get overdone here.”

American Heritage has 12 branches in the suburban Tulsa market. The bank is building a branch at 71st Street and Union Avenue and has plans for a branch in north Sand Springs, Berry said.

Bennett, however, thinks the opportunities are nearly boundless.

ONB opened in January 2000 and, during its first four years, opened a branch annually. ONB, in six-and-a-half years, has grown to $400 million in deposits.

“We are an example of how branch banking has expanded,” Bennett said. ONB is planning another branch, in Edmond, plus “other things” that he declined to disclose.

“It is a great time to have a branch,” he said.

Charters Decline

While the number of branches has rocketed upward, the number of bank charters in the state has decreased since the late 1990s, Beverage said.

“The number of charters is 268, (nearly half of the 500 reached in the late 1980s) while the actual number of locations (which is what you’re seeing on the street corners) has increased to more than 1,200,” he said. “The reason they’ve increased in terms of raw numbers is that Oklahoma’s economy is doing very well and the banks that are establishing branches are doing so because they think it’s to their advantage to do so.”

Bennett agreed.

“I look at it as, there are fewer banks than when we opened in January 2000. There were 308 bank charters then, and today there are 40 fewer banks headquartered in Oklahoma,” he said. “From my point of view, there are fewer decision makers — more branches means more convenience.”

The boom in branch banking stems from a rule change in 1999, Bennett said.

“Branch banking was much slower before then and non-existent in the 1980s,” he said. Twenty-five years ago Oklahoma was known as a unit-bank state, meaning that a bank could only have one branch – and that had to be within 1,000 feet of the main office.

A Matter of Convenience

While the number of branch banks has mushroomed, Tulsa remains one of the highest-priced markets for CD rates in America, Bennett said. Competition has helped the market.

And not just are urban banks expanding, Beverage said.

“There are banks from Crescent, Yukon, Mustang, El Reno,” he said.

Banks will continue to work toward making banking more convenient, Beverage said.

“A lot of people like to do business face-to-face,” he said. “I am a (baby) boomer. I like touchy feely stuff. My kids like to do their banking anywhere. I am like a lot of people who still enjoy getting cash, making deposits — a lot of people prefer to do their banking face to face.”

Banking in discount centers and grocery stores has grown because banks are attempting to attract more customers and giving Oklahomans more choices,” Beverage said.

“And not just at the Super Wal-Marts or Arvest, City National Bank,” he said.

Branching has grown because depositors care a great deal about branch locations, Bennett said. “They use those banks on a constant basis.”

Borrowers, however, do not care as much because they do not have constant transactions — they might borrow for a house and not come back to the institution for years, he said.

“Branch banks are a benefit to depositors,” he said. ?

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