Community banking plays an important role in fueling the local economy, according to Andrew J. Ryback, president and CEO of Plumas Bank. Ryback is a passionate advocate for community banks and serves as chair of the California Community Banking Network and a state delegate for the Independent Community Bankers of America.
Keeping local dollars local
When an individual deposits funds with a commercial bank, the institution manages that money. Deposits are used to make loans, which is how banks generate profit as businesses, he explained. A large bank may make loans anywhere in the nation or even internationally, directing its funds into the most favorable investments available wherever they may be. A community bank lends within the community it serves, funneling local deposits into area businesses.
“It’s just like shopping locally,” said Ryback.
“It’s just like shopping locally.”
Andrew J. Ryback, Plumas Bank president and CEO
Community banks also contribute to local economies by employing staff who live in the area. Beyond tellers at branch bank counters, that may include back office positions in areas such as human resources, accounting, record keeping, information technology, loan processing, facilities maintenance and more. Plumas Bank has about 70 employees in Plumas County, said Ryback. Many are also active in local nonprofits and service groups such as Head Start and the Plumas Crisis Intervention and Resource Center. Ryback himself serves on the Plumas District Hospital board.
Banks that are deeply ingrained in the community have a double stake in its prosperity, both personally and professionally. As residents, bank staff and leadership want to do right by the community and see it thrive. At the same time, there’s a business incentive: a strong local economy helps the bank’s prospects too. If the economy isn’t strong, said Ryback, that impacts deposits and the ability to make loans, threatening the business’s survival.
Finally, community banks offer more personalized service, said Ryback. Local branch staff members know their clients and greet them by name. Plumas Bank serves communities with different economic supports; some may be based more in agriculture, others in tourism. Branches are able to respond to those needs. They also have the flexibility to be more nimble than larger institutions. For example, Plumas Bank has plans to waive overdraft fees for clients who are under evacuation orders due to current wildfire activity. After the 2021 Dixie Fire, Plumas Bank’s Greenville branch served as a community meeting space. The bank also provided a mailing address for local organizations that needed a physical address in order to seek grants, said Ryback.
Community banks in context
A community bank is defined by the amount of assets an institution holds, said Ryback. Community banks typically hold under $10 billion in assets. The average figure is about $800 million. Plumas Bank holds $1.6 billion.
Today there are about 4,400 commercial banks nationwide. Most fit within the community bank category. Only about 160 banks hold $10 billion or more in assets. The average community bank is only about one-sixty-fourth the size of a national or multinational institution. To illustrate the point, Ryback pulls a Hot Wheels car from his desk drawer. If the toy represents a community bank, he explains, a typical multinational institution would consist of 10 full-size vehicles. The scale is “just staggering,” he said.
Community banks have been declining for decades — a process sometimes referred to as the Great Consolidation. Between 1980 (when Plumas Bank was founded) and 2023, the overall number of commercial banks insured by the Federal Deposit Insurance Corp. fell from 14,434 to 4,036. During the same period, total assets rose from $1.5 billion to $22.4 billion.
As online banking rises in popularity, even large multinational banks have been closing branches at an accelerated rate — a trend that restricts opportunities to build wealth, especially among lower-income, rural, older and disabled individuals according to Fed Communities, a communications platform of the Federal Reserve designed to share research on low- and moderate-income economic development. It also affects those without regular access to internet and cell service.
Ryback attributes the decline to increased banking regulations aimed at reigning in the largest banks. Smaller banks lack the staff and resources to support additional reporting, recordkeeping and other requirements, he said. Applying regulatory standards equally to large and small institutions makes community banks less sustainable. That forces closures and mergers, and reduces the number of new startups entering the marketplace.
The effect is less competition and more limited access to banking services for clients. Communities suffer as a result, said Ryback. About one-third of communities nationally would have no banking institution at all if not for their local institution, he added. In Greenville and Portola, for example, Plumas Bank is the only available option. Quincy and Chester have access to both Plumas Bank and US Bank.
‘Coming down off the mountain’
Plumas Bank was founded in Quincy almost 45 years ago, in December 1980. When Ryback first joined Plumas Bank in 2001, there were six or seven branches. The institution had just opened its Truckee branch, which was a big step forward, Ryback recalled. At the time, another community bank in the area had recently closed for unrelated reasons. Plumas Bank benefited from the opportunity to hire experienced local employees, and received an influx of clients.
However, said Ryback, growth opportunities in mountain communities are more limited. In recent years, Plumas Bank has “come down off the mountain,” expanding into small cities such as Redding, Reno, Chico and Yuba City where there is “a little more opportunity.” Today, there are 15 branch locations across northeastern California and western Nevada, as well as two loan production offices and a Small Business Administration office serving five Western states.
Nevertheless, the majority of branches are still located in rural towns that “might not have access to larger banks” and place a special emphasis on serving “local business owners who may feel ignored by larger financial institutions.”
The bigger picture
Much of Plumas County was a primarily timber-based economy not that long ago, said Ryback. As recently as the 1970s, the Plumas National Forest was one of the nation’s major producers of logs from federally managed land. Today the timber industry continues to adjust to changes in federal regulations.
“Many are struggling, trying to find a new identity and a way to move forward,” Ryback said.
It’s a common story elsewhere in the country as well — for example, in the Midwest’s Rust Belt (formerly the Steel Belt). Community banking may be one part of the economic puzzle. Fostering small business could be another. But it’s a complicated picture — one The Plumas Sun will revisit in future stories.
