Community Banks Thrive as Industry Consolidates

Daily Herald (Arlington Heights, IL), March 13, 2003 | Go to article overview

Community Banks Thrive as Industry Consolidates


Byline: Hans-Olav Hodol Medill News Service

Just a few years ago banks were popping up throughout the Chicago area, targeting niche markets and customers disaffected by larger banks.

That trend has cooled, leaving the area with lots of thriving community banks, even as larger banks are consolidating.

Just three state charters were applied for last year, down from the peak of 17 in 1999.

The U.S. Treasury Department chartered no national banks in Illinois in the first half of 2002.

It's part of a national trend. New bank charters are at their lowest point since 1994.

Reasons for the shift range from the slow economy to a lack of merger activity at bigger banks. Such mergers often direct some customers to smaller banks.

And it isn't as easy to find investors these days to put up the start-up collateral.

"Investors are more cautious in this time with an uncertain economy and they (are taking) a more conservative approach," said Debbie Jemison, spokesperson for the Illinois Bankers Association.

It is also possible that Illinois is reaching its saturation point.

Craig Woker, a financial analyst at Morningstar Inc., in Chicago, said he thinks there are already too many banks.

Illinois has about 750 banks and saving institutions, he said, which is almost one out of ten in the nation.

So Barry Kreczmer and Jerry Szklarzewski were really bucking the trends when they started American Eagle Bank in South Elgin four months ago.

It has since grown to nine employees and total assets of about $29 million.

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