Shrinking rural populations lead to bank closures

The migration from rural to urban areas is decreasing rural populations and forcing the closure of banks that have been linchpins of small communities for more than a century. In Iowa between 2010 and 2015, the number of bank charters dropped from 360 to 311 and the number of branches dropped from 1,621 to 1,577. The state hasn't seen a new bank start since 2006, Matthew Patane reports for The Des Moines Register. One reason is technology, which allows customers, especially younger, more technological savvy ones, to conduct most of their banking business off-site. (Register photo by Zach Boyden-Holmes: The Community Bank in Lucas, Iowa, opened in 1883. It closed in 2014)

"Iowa bankers have often said regulations imposed by the federal government after the financial crisis impose a harsh burden," Patane writes. "While the regulations were targeted at bigger banks, community banks face the same requirements, imposing more costs, they've said." Jeffrey Young, CEO of Iowa Trust & Savings Bank in Centerville, told Patane, "The regulation is just horrendous for small banks. The efforts I put into compliance now used to go out into helping the community."

With fewer customers, rural banks are cutting employees and hours, Patane writes. Despite the conveniences of technology and being able to bank from anywhere, small banks offer a familiarity that larger banks and technology can't compete with. Peggy Williams, branch manager of Peoples Bank in Lacona, Iowa, said she knows all her customers in the town of 350 by name. She told Patane, "Down here, I know them. I know who their mom is and who their brothers and sisters are and their family situation. I know the people down here appreciate us having an office here." (Read more)