Oregon’s PremierWest Bank announced today that they will be slimming down this spring, by consolidating 11 existing branches into their neighboring locations. Put more simply, they will be closing 11 locations, in an effort to lower overhead costs. They will complete the consolidation by April, according to the press release.
Currently, the bank has 43 branches in Southern Oregon and Northern California. According to the bank, the 11 branches they’re closing accounts for less than 10% of bank wide deposits, despite representing a quarter of their locations. They expect to save $1.9 million annually by closing the underperforming branches.
The upfront costs are not cheap though. PremierWest expects to spend $790,000 in the first quarter of this year, on consolidation costs alone.
It’s another case of regional banks feeling the squeeze, both due to the economy and regulatory changes, combined with the growing irrelevance of branch banking.
Jim Ford, their CEO stated this explicitly in a prepared statement: “Nationally, branch banking locations have declined every year since 2008 due to three trends which cannot be ignored: 1) the rapid increase in popularity of Internet, mobile, and remote banking options 2) the weakness in the economy and 3) increased government regulation affecting the costs of operating community banks.”
At the very least, PremierWest Bank won’t have to close all 43 branches, or be bought out by a regional or national competitor. On the other hand, a takeover would have been better for customers in small Northern California/Southern Oregon towns, like the ones losing branches. At least then, the institution assuming the deposits would likely take PremierWest’s branches over.
In Oregon, PremierWest is closing their locations in: Drain, Glide, Shady Cove, Running Y in Klamath Falls, and Airport Road in Medford. In California, the bank is closing the following locations: Weed, Dunsmuir, Dorris, Tulelake, McCloud, and Bechelli Lane in Redding. Customers in these towns will have to decide between finding something closer to home or driving to the next town every time they need to talk to a teller.