Will Whatcom County continue to see a significant number of bank branches close?
Whatcom County is following a state and national trend when it comes to the number of bank branches closing.
As of June 30, Whatcom County had 48 bank branches, according to data from the Federal Deposit Insurance Corporation. That’s 20 fewer branches than 10 years ago, or a 29% decrease. That’s a faster-paced decrease than the state total, which dropped 15% between 2010 and 2020. Nationally, the average decrease was 11.7% for the same period.
Along with offering fewer non-online services, the closure of branches also means jobs lost in the professional services industry. If those branches that closed averaged seven employees, that’s 140 jobs that disappeared in the past decade in Whatcom County.
There appears to be several factors for the decline of branches in areas like Whatcom County. While online banking was already a preferred method before the pandemic, a significant number of people over age 60 used it for the first time after COVID-19 arrived, leading to even fewer people to use bank branches.
Mergers have also led to fewer branches through the consolidation process. In Whatcom County, some recent mergers include Banner Bank acquiring Skagit Bank in 2018 and Heritage Bank acquiring Whidbey Island Bank in 2014.
Kamyar Monsef, chief retail banking officer at Peoples Bank, said the decline in branches started after the 2008 recession and will likely continue as technology continues to provide faster ways to conduct day-to-day transactions.
Peoples Bank, the only bank headquartered in Whatcom County, boasts the largest amount of local deposits at about $1.35 billion, or 24% of the market share. The bank, which celebrated its 100th anniversary this year, has nine branches in Whatcom County, which is just one less than it had 10 years ago, according to FDIC data.
Monsef said that while they’ve seen a slight decrease in foot traffic as more people use its online services, for the most part the branches remain busy, with bankers helping customers with more complicated transactions.
“Given some of the current challenges our business customers are dealing with — from supply chain issues to hiring and retaining employees — local expertise is critical,” Monsef said in an email.
It’ll be interesting to see where things go with bank branches, said Hart Hodges, co-director of the Center for Economic and Business Research at Western Washington University. Hodges noted that this area, particularly Bellingham, is well-served with financial branches — not just banks, but by having a strong contingent of local and regional credit unions.
He cities the size of Bellingham will be fine in terms of offering banking services, but wonders about smaller Whatcom County communities that may not have enough people that use bank branches to justify the expense.
That could lead to a “bank desert,” much like the idea of a food desert where residents have to drive some distances to get the service or product. That could be especially problematic for small communities that don’t have decent broadband infrastructure in place.
“What is the future of small regional banks? They can offer service — but can they afford to do that in small markets?” Hodges asked in an email.
Monsef said that banks, such as Peoples, might see the trend of closing branches as a chance to expand services.
“As larger, national/regional banks continue to consolidate their branch operations and leave certain markets, we see an opportunity to serve more communities across the state and we are actively working to expand our branch network and digital services,” Monsef said.
