Two banks hold half of Richland County’s deposits

MANSFIELD - Over the past two decades, two banks with local roots managed to capture, collectively, more than half of all bank deposits in Richland County.

Richland Bank and Mechanics Bank pulled out far in front of the 14 institutions currently doing business here.

The two institutions — which in 1995 held about one-third of all bank deposits across the county — had upped that by last year to more than 50 percent.

Richland Bank holds $517.8 million in deposits, or a 28.9 percent market share, according to Federal Deposit Insurance Corp. (FDIC) reports.

That puts the bank (a division of Park National Bank in Newark since 2008) at the top of the list, up from No. 2 two decades ago, when it held a 16.8 percent share of deposits, slightly behind Bank One Mansfield.

While many large national regional “brand name” banks have closed branches over the past decade or so, Richland and Mechanics both have maintained a strong community presence, focused on personal service to local customers, said Richland Bank President John Brown.

The two gained market share during a period when online banking debuted, and when all banks typically found customers stopping in less often for transactions, he said.

“As some of the larger banks have withdrawn from smaller communities like Mansfield, it has presented an opportunity for us,” Brown said.“The larger banks have become lesser competitors, as their presence and the number of branches they have in the community has dwindled.”

“What differs with a community bank like Richland Bank is local service,” Brown said. “If necessary, customers can pick up the phone and call the president of a local bank (personally) and get answers.”

Banks operating strictly online have not captured a large total market share “by any means,” he said.

Still, technology is “something we have to pay attention to,” he said, adding Richland Bank still needs to make sure it updates technologies to stay current with customers’ wishes.

Richland Bank’s strongest single competitor is Mechanics, Brown said.

Mechanics rose from No. 4 in Richland County in 1995, with $186 million in local market deposits (a 14.9 percent market share) to No. 2, with $385 million (21.5 percent) last year.

Mechanics CEO Mark E. Masters said the growth in Mechanics’ market share is due to a combination of factors.

Over the past two decades, Mechanics went from four locations in Richland County to nine. The most recent, a limited-service branch near Shelby, opened this past fall.

“We have added branches, and that certainly makes a difference,” Masters said. “But we also would like to think that our way of serving our customers has had a significant long-term impact. Independent community banks continue to distinguish themselves in the marketplace by delivering ‘people to people’ service to customers.”

“For us, it really comes down to human interaction. We have to make a difference there, because we can’t compete with the large national banks in offering ‘cutting edge’ products,” Masters said.

Dominant market shares a change

Clear leadership in market share by a couple of banks is a change from two decades ago, when market share was split more evenly, with four leading institutions holding between 17 and 14 percent each.

Today, however, no other banks come close to the two leaders for market share. KeyBank has 11 percent and JPMorgan Chase Bank, 10.5 percent. The other 10 institutions doing business in Richland County hold anywhere from 7.5 to 0.04 percent of local deposits.

Over two decades, Richland County gained more competing banks, but the total number of bank branches available around the county fell. In 1995, 12 different banks had 53 branches open. But by last year,14 institutions operated only 49 branches here.

The two leaders in market share went against that trend, currently operating more branches than they did 20 years ago, Richland Bank upping the number from nine to 13, and Mechanics doubled its branches from four to nine.

The half-dozen new branches opened around the county during the past decade also included Sutton Bank’s Lexington Avenue branch in 2007, Woodforest National Bank, opened in Wal-Mart in 2008, and CNB Bank in Shiloh the same year.

Richland Bank has not added any branches recently, Brown said. The last two locations added were “in-store” branches at two Kroger grocery stores to increase convenience for bank customers, through extended hours.

Those expansions worked fairly well, Brown said, adding it didn’t hurt that the locations were high-volume retail locations local residents already were frequenting, Brown said.

“It was their desire (Kroger’s) to partner with a bank that has a strong local presence. Our market share, I’m sure, helped us or was a differentiating factor in Kroger wanting to partner with us,” he said.

Mechanics, however, added most of its new branches during the past decade, including the Trimble Road branch six years ago and Bellville branch a little over a year ago. Both new offices were built along a new plan that did not include traditional teller lines. Instead kiosks are used, and staffers move around the floor to interact with customers, Masters said.

Larger financial institutions have relied heavily on “more technological solutions” and have closed branches in communities like Mansfield, Masters said.

“We’ve tried to use technology at our branches in a way that draws out people to create a better experience with our customers. Technology has freed them up to interact with customers,” he said.

“We encourage each of our office managers to develop a welcoming atmosphere,” whether that’s by offering include coffee and doughnuts on Saturday mornings or customer appreciation days. “Some of it is pretty old fashioned,” Masters said.

Mechanics has worked “to make people feel at home and comfortable” when they walk into a branch, he said.

Mechanics’s new drive-through for its downtown office was set to open toward the end of this month.

County also has 2 credit unions

Two credit unions in operation in Richland County, both originally affiliated with some of the area’s larger manufacturers, also hold Richland County residents’ money.

The National Credit Union Administration, which oversees credit union operations, does not release a report showing market share by county. However, Directions’ deposits held within the county appear to be at least three times larger than Advantage’s.

Advantage, with one office on Stumbo Road in Ontario, formerly was known as Auto Workers Credit Union, chartered in 1961 serving workers from the former GM plant.

It has seen its assets rise slightly over the past two decades, even with closure of the plant, from $32.8 million in 1995 to $36.6 million last year. But its membership has shrunk from 7,211 to 6.380.

The other credit union with branches in Richland County, the former Empire Affiliates Credit Union, in 2005 became part of what is now Directions, one of Ohio’s largest credit unions, and still growing.

Directions currently holds $448.8 million in assets across Ohio, with 73,261 members, and branches in the Toledo area, Mansfield, Shelby, Ashland, Wooster, Willard and New Philadelphia.

Empire Affiliates initially was formed in the early 1960s, to help workers at Empire Steel obtain loans. Later, services like checking and savings were added. When it merged in 2005 into the Toledo Area Catholic Credit Union in 2005, Empire had 38,000 members — not only steel plant employees around Ohio but other members of the community — and held $140 million in deposits from a multi-county area.

Over the next three years, Toledo Area Catholic became even larger, adding Knox County Credit Union, then the Erie Shores Credit Union also joined, and in 2008, it changed its name to Directions.

Directions currently has 18 branches, in the Toledo, Mansfield, Shelby, Lexington, Ashland, Willard, Wooster and New Philadelphia areas, most of them still located in the working-class neighborhoods where they originally were built, said President and CEO Barry Shaner.

Directions plans to open a 19th this year — the credit union’s first branch in Michigan, after Ohio and Michigan signed reciprocity agreements allowing the agencies regulating financial institutions for each state to oversee branches across state lines.

The Michigan branch is just a few miles from Direction’s Sylvania headquarters. But the credit union theoretically could continue to expand into Michigan in the future, he said. “I don’t know that it’s something that is going to happen immediately,” Shaner said said.

Currently, Directions maintains $122 million in deposits in Richland County, with three branches in the Mansfield area and two more in Lexington and Shelby.

Directions has grown its deposits by 6 to 7 percent annually, and is expanding membership by about 3 percent a year, the CEO said.

The credit union built a new Diamond Street branch after the merger, rebuilt portions of its Ontario branch to add more customer privacy, and remodeled its Ashland Road branch, Shaner said.

Directions is run by its members, and has taken pains to add “modern” services they want, he said. “Our owners are our members are our customers…they’re one and the same,” he said.

Has Directions and Advantage discussed any affiliations?

“They have their own credit union. We have not talked about it,” Shaner said.

Credit unions have a history of working together collaboratively, more so than banks, he added. “We know the folks over there. We have shared a business loan or two.”

During the past five to six years, Directions began offering business accounts, geared toward businesses that are so small, banks have not focused on, Shaner said. “Most of the businesses we work with would be what they (banks) would consider to be almost micro-businesses,” he said.

But the core of Directions’ business started with serving households, he said.

“We have found that the best way for us to serve our members and our communities is to make sure that our members understand the financial products that we offer. We offer a lot of education and financial sessions,” Shaner said.

lmartz@mansfieldnewsjournal.com

419-521-7229

Twitter: @MNJmartz

Source: Federal Deposit Insurance Corp. (FDIC)