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BN Banks might have branches on every corner, but they still see value in being downtown

By Valerie Kiger

reising@postbulletin.com

In the highly competitive banking environment that is Rochester, the heart of the city also is the centerline of the playing field.

Many local banks keep a downtown presence. Some set up a streetside storefront, others find a niche in the subways or skyways. Some maintain a larger presence, such as US Bank, which has been in downtown Rochester (under varying names) since 1864.

"US Bank obviously has a pretty large investment in the downtown," said President Paul Barton. The bank maintains a branch at Fourth Street and First Avenue Southwest and occupies a building at 155 First Ave. S.W.

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There's good reason to locate downtown, bankers say.

"Without a doubt, the reason to be downtown is because it is the center of Rochester. It's the center of what's happening in Rochester, in business," said Matt Wohlers, CFO of Think Federal Credit Union, which has a downtown location 25 Second St. S.W.

Barton agreed. "There are a large number of people who work downtown and a large number of professionals," he said. That provides a customer base for US Bank's private and business banking services. "There are a number of accountants and attorneys who conduct their business downtown, and it's very convenient to carry on business with those folks." Having a downtown location has remained important to Home Federal Savings, even though the bank closed its downtown branch in 2002. The bank is scheduled to open its latest downtown branch, with full-service private and business banking, this month.

"The location we were in before was not suited to us," said corporate affairs director Al Mannino of the small space in the Galleria shopping center. "We decided to let the lease run out and move out of downtown until a better location for us became available." Home Federal has spent the past seven years building a strong business banking division, Mannino said, and much of its clientele is downtown.

"We have an awful lot of relationships with customers in the downtown area. ... There's been a lot of demand for us to be going back downtown," Mannino said.

But it is because downtown apparently isn't the right place for every bank that Home Federal has an opportunity to return to downtown. Eastwood tried to make a go of a downtown branch in two locations, but couldn't build enough business to stay. Home Federal took over Eastwood's vacated 2,200-square-foot skyway site, just off the Galleria in Suite 200 of the 100 First Avenue Building.

Previously, Eastwood tried a street-level, storefront location in 1990, and customers said they wanted safety deposit boxes and access through the skyways, said James Talen, president of Eastwood Bank.

"We spent quite a bit of money moving to the skyway and adding a vault for safety deposit boxes," Talen said. Business still didn't flourish, and customers seemed to want a drive-up ATM and easier parking.

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"It was very simple in that, for whatever reason, we couldn't attract the customers down there. ... We tried for 15 years, and we finally looked and said we can't keep doing this," Talen said.

Eastwood left downtown last June, moving to the former John Barley-Corne restaurant site off South Broadway. Eastwood has three Rochester locations and other branches around Olmsted County. Three employees and about 1,000 accounts moved with the closing of the downtown office, Talen has said.

While a few accounts were lost in the move, "we gained those back and then some," Talen said.

The new location places the bank in an area with strong retail growth. The new office can offer drive-up service and lending operations.

Talen acknowledged the downtown branch faced stiff competition. Besides Think FCU, US Bank and now Home Federal, other banks with a downtown presence include Wells-Fargo, Sterling State Bank, Premier and Associated.

While a number of banks are downtown, long-lived worries about the city center's vitality prodded Eastwood to keep trying to make its downtown branch successful.

"I know there's concern about downtown. That's part of why we stayed so long," Talen said. In the end, though, "you just about have to go where the customers want you to go." That's true even within the bounds of the city's central business district, bankers say.

"There are people who only do their banking online, and to them it doesn't matter where we're located. But there are people who bank downtown, and they want to do their banking in a convenient location. (Attracting customers) depends on how convenient your location is," said Barton. "The more convenient locations there are, the more competitive the (banking industry) gets. But with the concentration of people in this area, it is attractive to banks. Competition in the downtown is not new." Home Federal isn't worried about re-entering the fray. "We've got enough of a customer base that it's a win-win for us," Mannino said.

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Home Federal already has four drive-up locations in Rochester, while US Bank recently opened a large northwest branch, in addition to one other out-of-downtown branch in the city.

Think's downtown branch has met expectations during its five-year history, Wohlers said. The IBM credit union has an on-site location and two other Rochester locations outside of downtown. Like other banks with a downtown presence, Think isn't ignoring opportunities to grow in the outlying city's hotspots. Think is building a branch near Wal-Mart North and has plans for a branch near Century High School.

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