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It All Adds Up: Why Keeping Your Money Local Makes a Difference

“Convenience is really important to me,” said Wells Fargo customer Lisa Garcia.

Indeed, ease and expediency are an integral part of our society and Wells Fargo tapped into that desire. The bank has 12,000 ATMs nationwide and owns 6,601 branches in 41 states, including five branches in Pueblo – making it the most represented member of the Big Four in town.

Headquartered in San Francisco, Wells Fargo rose from the ashes of America’s financial collapse and has continued its upward growth. In 2011, Wells Fargo posted a record profit of $15.9 billion – while at the same time spending a record $630 million on advertising. These profits were largely passed down to shareholders, who saw an increase in their quarterly dividends from 12 to 20 cents per share. This splitting of revenue illustrates a difference between the interests of “superbanks” versus local banks.

Leaders of community banks send a clear message about their role in Pueblo. “The goal of Wall Street banks is shareholder value, whereas the goal of Legacy Bank is community success,” said Andrew Trainor, Regional President of Legacy Bank and former Chairman of Colorado Bankers Association.

Local banks and credit unions have begun to provide the convenience of larger banks, allowing customers to complete most financial transactions online or by phone. They also offer the additional benefit of recycling a large percentage of their deposits from customers back into the community.

According to Ent Federal Credit Union’s 2010 Annual Report, it had $2.6 billion in member deposits. Ent loaned 70% of that capital directly back to their members in Pueblo, Colorado Springs, and Denver.

Out of the $15.9 billion profit that Wells Fargo made in 2011, they converted only 41% into consumer loans dispersed across the nation.

“Banking at a local credit union means your deposits go towards helping other community members when they need a loan,” said Cathy Grossman, Vice President of Corporate Communications for Ent Federal Credit Union.

Unlike the Big Four national banks, credit unions are owned by their members and elect their board of directors democratically regardless of the amount of money invested into the credit union. They operate to serve their members rather than to maximize profits. Similarly, many community banks – such as Legacy Bank – are privately owned institutions that exist to serve their customers, rather than groups of investors.

When asked about why community banks like Legacy Bank aren’t doing more to capitalize on the nation’s sentiment over the recent financial crisis, Trainor remarked: “Big media tends to only focus on Wall Street banks. Often, community banks are regional so their message gets lost.”

As dissonance between consumers and major money centers grow, Legacy Bank’s message resonates with more Puebloans. “Our bank has grown because of what Wall Street has done, because the Pueblo community knows we are safer,” said Trainor.

Rather than spend money on advertising, Legacy Bank chooses to focus their dollars giving directly to the Child Advocacy Center, Sangre De Cristo Art Center and Parkview Hospital.

Other community banks have also taken initiative to improve Pueblo’s infrastructure. Through philanthropy programs like Youth Endowment Series (YES), Ent provides up to $5,000 in grants to organizations benefiting youth in Pueblo County. Recently, Sunflower Bank financed Pueblo Housing Authority’s Ashwood Apartments, designed as affordable homes for senior citizens, located on the corner of Mildred Place and E. 21st.

A major priority for Puebloans in deciding which institution they trust to shepherd their money is the fees they must pay and daily minimums they must maintain to start and maintain their accounts. In this area, local and national banks are largely similar – Sunflower charges a $4 monthly maintenance fee for a savings account, compared to $5 for Wells Fargo – and each give their customers many ways to waive these fees. Again, the difference between local and national banks is not a question of how much customers put in, but rather where their money goes after it has been given.

With this in mind, perhaps the most beneficial aspect of banking local is that the banks are centered in or near Pueblo. The close proximity between the leaders of local banks and the people they serve help to form a symbiotic relationship that directly enriches the community. The leaders of these community banks are committed to the sustainable economic growth of Pueblo.

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