For over a century, the small Illinois town of Leland, population about 1,000, has had its own bank. For many of those years, there were two banks.
So it was something of a shock to the community in northern LaSalle County when Chicago-based First Midwest, owner of the one branch in town, announced last summer it would shut it as part of a wave of branch closures. Fortunately for the village, DeKalb-based Resource Bank decided to swoop in, determined to serve Leland if First Midwest wouldn’t, almost as soon as its leaders heard the news.
But since then, First Midwest has done everything to make it as hard as possible for Resource Bank in Leland, even though First Midwest’s nearest branch is 10 miles to the east, in Sandwich. First Midwest, with $15.5 billion in assets and 120 branches, put the Leland bank building on the real estate market last fall, only to reject Resource Bank’s offer exceeding its asking price.
The situation reached an almost comical nadir when the village of Leland on March 5 rebuffed First Midwest’s proposal to donate the building. There were strings attached to that seemingly generous offer—the village would be barred from leasing the property to any other bank.
“As a village, we don’t really have a need for another building at this time,” Mayor Danny Shumway says. “We’re not in the business of taking new land off the tax rolls.”
First Midwest spokesman Jim Stadler says the bank is “assessing our options regarding the property.” Declining to comment further, he says in an email, “We do not comment on our real estate portfolio and our strategy.”
He points out, “There is a bank in Leland. Resource Bank on Genessee Street.”
Indeed, Resource Bank is in Leland—on school-owned property, operating out of a trailer that’s designed for situations like when tornadoes hammer a small town and banks need to set up temporary facilities quickly to take care of their customers.
“There are limited options in the town,” says Diana Shott, CEO of Resource Bank. “Here is this bank facility that is sitting there vacant which we’d very much like to be in.”
Leland isn’t the only small town in LaSalle County in this boat. Last year First Midwest also closed up shop in even smaller Serena, 14 miles south of Leland. First Midwest leases the building that housed the Serena branch and has been unwilling to permit Resource Bank to lease that space, Resource executives say. They’re operating out of a mobile office in Serena as well.
The banking drama playing out 70 miles west of Chicago is unusual for that part of Illinois. Unlike the Chicago market, where banks are shuttering more locations as consumers gravitate to electronic banking for basic transactions, LaSalle, Grundy and DeKalb counties have seen very little change in recent years. There were 122 bank branches in the three counties as of June 30, according to the Federal Deposit Insurance Corp., a reduction of just four from 126 four years earlier.
There are 36 banks with locations in the three counties. Of the nation’s five largest banks, just one, JPMorgan Chase, has a presence of any kind in that area. That’s a single branch, in Morris. First Midwest had 15 branches in the three counties as of June, containing over $1 billion in deposits, a leading market share of 16.3 percent. Resource Bank had $425 million, or 6.8 percent, in 10 branches, making it the fifth largest by deposits.
Contrast that with the six-county Chicago area, which lost 281 branches in that time frame—more than 10 percent of the 2,627 as of June 2014.
Contrast that, too, with other rural parts of the U.S., which increasingly are losing locally owned banks that tend to be the most active lenders in those regions, as well as branches of out-of-market banks. They don’t have the many other choices urban and suburban markets do to replace the ones that leave.
“These communities need banking services,” Resource Bank’s Shott says. “This is not a go-online thing. They want to shake hands with people they trust. Believe it or not, brick and mortar still matters to small towns.”
Shott and Resource Bank Chairman Richard Katz say they’re committed to Leland and Serena no matter what First Midwest ultimately decides to do with the buildings it controls. If that means building from the ground up, that’s what will happen, they say. In the meantime, though, Resource Bank’s trailers limit the services it can provide to customers in the towns. There’s little room for private consultations, and services like safe-deposit boxes can’t be offered.
Resource Bank traces its roots to 1901, when it was chartered as the First National Bank of Malta; it moved to more populated DeKalb 27 years ago but still has a Malta location. It now has $473 million in assets and 12 branches (counting the temporary ones in Leland and Serena). Solidly profitable, the bank mainly makes agricultural and small commercial loans.
In Leland, the bank is an important part of the town, which features two small business strips, Mayor Shumway says. There are a general store, two antique shops, a beauty parlor, an insurance agency and a bar in addition to the bank. Residents typically work in nearby Caterpillar plants, or as carpenters and other trades workers finding work in the outer suburbs of Chicago, he says. Grain silos dot the landscape.
“To us, a bank is like a school or restaurant,” Shumway says. “It’s just part of the community.”
The news that First Midwest was pulling out came as a surprise, he says. “They never said anything to us about possibly closing. I was glad to see another bank willing to come in.”
This version of the story corrects the name of Leland’s mayor.