THE BIG QUESTION: Too many financial institutions?
Is Greater Des Moines over-banked?
Friday, August 23, 2013 7:00 AM
Based on your knowledge of the Greater Des Moines market, would you say that Greater Des Moines has too few, just enough or too many financial institutions?
It’s hard to imagine businesses or consumers believing they have too many options for financial services in Central Iowa. Our unique mix of a strong community banking sector, combined with a national and regional bank presence, has created a competitive environment for financial services. Free-market competition is still what drives most consumer benefits.
New banking entrants to Des Moines reflects the gradual migration of Iowans to urban centers. We have 51 financial institutions present in (the Des Moines Metropolitan Statistical Area), with total aggregate Iowa deposits of $15.5 billion. As a comparative, Omaha-Council Bluffs has 75 financial institutions present in the metropolitan statistical area with $23.6 billion in aggregate deposits.
I think that there are enough; it suits my needs. I don’t hear of any banking shortages, or anyone expressing a need for more banks or a different type of banks. So my take is that banks are sufficient to handle the needs of our community, from my standpoint. I’ve just not heard complaints about numbers of banks or types of banks that are here.
The market, in my opinion, was over-banked prior to the economic slowdown that began in 2008. This resulted in eroding credit underwriting standards and financial stress to a number of banks dealing with credit issues. Our economy and population have grown over the past five years to a point where we currently have the competitive balance and number of locations to adequately meet the needs of the public.
The strong national ranking of the economic conditions for the Des Moines market is a validation that banks are serving the needs of the community to provide capital for growth. Polk County has remained unchanged with 37 banks providing financial service from June 2007 through June 2012. We have only increased the number of branches by two over that period. The total deposits in commercial banks have surged significantly with the average deposits per branch location increasing from $58 million to $86 million.
Several new bank locations have opened in the past 10 months, and we will inevitably see a few more. The Des Moines banking industry continues to adapt and grow with their customers.
Des Moines is not over-banked. A diverse community needs a diverse set of banks that can cater to the wide range of customer needs in Des Moines. Des Moines could use more banks that provide broad international coverage. Many of our local businesses have global operations, and while there are some banks that can meet these needs, more truly global banks would be a good thing for Des Moines.
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