In Lawrence, 2002 was a good year for people building banks. It was not such a good year for people putting money in them.

The number of new banks and bank branches grew by 17.8 percent during 2002. That made Douglas County the fastest-growing bank location in the state, with a growth rate well above the statewide rate of 1.6 percent.

Deposits, though, were another story. Bank deposits throughout the county grew by only 4.1 percent in 2002. The growth rate was the slowest among the state’s five urban counties — Johnson, Shawnee, Wyandotte, Sedgwick and Douglas. It also was below the statewide average of 5.8 percent.

Some bankers said the numbers were beginning to show a local banking industry in need of adjustment.

“You can’t grow deposits at 4 percent a year and branches at 17 percent a year for very long,” said Todd Sutherland, president of Lawrence’s University National Bank. “It shows that we’re all going after the same business, and that’s not what you want for the long term.”

A host of theories

Opinions are mixed on what the slow growth in deposits means about the area economy.

Bankers agree that, in the long term, deposit growth is an important indicator of the health of a local economy. After all, the amount of money in area bank accounts is one of the most direct ways to measure the area’s wealth.

Plus, deposits are the predominant way banks accumulate money that they loan out to individuals and businesses. If deposit growth isn’t strong, banks will have to curtail their lending activities.

Banks with strong lending abilities are usually considered among the essential ingredients for a growing economy.

As the Lawrence banking industry continues to expand, many new banks are offering features to draw customers in a competitive market. Jennifer Attebery, teller at CornerBank, 4621 W. Sixth St., works at her station Thursday where customers can view both a customer account verification monitor, in counter, and one of the banks 50-inch plasma monitors, upper left, that can display ads, PowerPoint presentations and TV programs.

That’s why banking officials are keeping an eye on deposits.

“If this continued on for several years, it could definitely hurt some of the local financial institutions in the long run,” said Jean Milstead, who is interim president of the Lawrence Chamber of Commerce and a retired Douglas County Bank executive.

The evidence isn’t there, yet, to suggest Douglas County has a long-term deposit problem. Historically, Douglas County’s deposit growth has been well above the statewide average. From 1994 to 2002, the amount of deposits in the county grew by 54.5 percent compared with 29.8 percent statewide. During the same period, Douglas County’s deposits grew at a faster rate than the other four urban counties in the state, except Johnson County.

That’s why several bankers aren’t too concerned about the one-year performance. They are, however, wondering what caused it.

Ed Samp, community bank president of Lawrence’s CornerBank, said he would be more concerned about the numbers during a normal economic year.

Samp said he suspected area residents took money out of the unruly stock market and put it in real estate.

“It may be that Lawrence hasn’t seen as big of an increase as other areas because of the uniqueness of our real estate market,” Samp said, referring to Lawrence’s student housing market.

In other counties, like Shawnee or Wyandotte, people may be pulling money out of the stock market and putting more into savings accounts rather than real estate, he said.

Chuck Warner, president of Lawrence’s US Bank operations, said Lawrence residents, who may rely more heavily on stock market investments, were forced to pull more out of savings accounts to pay living expenses.

Others, though, said the cause may be more directly related to the type of growth in the county during the past year.

“To get a really good feel for why it happened, we probably need to look into the mix of jobs and businesses that we’ve created here compared to the other counties,” Ted Haggart, president of Douglas County Bank, said. “What kind of jobs did we add? What kind of salaries did we add? That’s going to play an awful large part in what type of deposits people make.”

Sutherland thinks he has a pretty good idea of what such a study would reveal.

“I think this probably is just a function of the makeup of our community these days,” Sutherland said. “It is a function of being a bedroom community and not having a lot of big, indigenous businesses like those other counties do.”

Lots of banks

Opinions were not so mixed about the rise in the number of banks in Douglas County. Any way you measure it, there are a lot of banks.

In case you lost count, Douglas County in 2002 had 53 banks and bank branches, up from 48 in 2001. Since 1994 the number of bank offices in the county has grown by 103 percent, compared to 21.5 percent statewide.

Per capita, Douglas County has the most banks of any of the five urban counties in the state. The county has one bank for every 1,886 people. Shawnee County comes closest to that number, with one bank for every 2,071 people.

The numbers leave Sutherland shaking his head.

“If you look at any rational factor about where to locate a branch, it would tell you Lawrence isn’t the place to do it right now,” Sutherland said. “But obviously lots of people disagree with me. It seems like there is a new announcement every month.”

Indeed, the banks keep coming. Last week, Sunflower Bank of Salina announced it would build its first Lawrence bank near 15th Street and Wakarusa Drive. Intrust Bank, last month, announced it would build its third Lawrence location in the same area. Late last year, Douglas County Bank broke ground on the northeast corner of Sixth Street and Folks Road for its eighth Lawrence branch.

The reason for the growth is simple, several bankers said. Lawrence — which has built at least 300 new homes a year for 13 consecutive years — is a loan hotbed compared with most other parts of the state.

“It is a sign of a strong and vibrant economy,” Haggart said. “We have had a lot of banks branch out here largely because they’re seeking loan opportunities. Oftentimes they are based in a community where there are fewer opportunities to make loans.”

Samp’s bank, CornerBank, is a good example. The company, based in Winfield, opened its new Lawrence headquarters building late last year on West Sixth Street.

Samp said, despite the number of banks in Lawrence, his company was pleased to enter the market.

“I know it may not be the most popular opinion among bankers, but I still think there is room for more banks in Lawrence,” Samp said. “Yes, it is very competitive here, but all that does is just make us work harder. That should be fine with everyone.”

Lots of perks

It should be particularly pleasing to consumers.

Samp said all the competition meant banks had to get more and more creative and convenience-oriented to attract enough customers to be profitable.

Free checking is offered at several area banks, weekend hours are available with others, and some banks have even decided to stay open on some federal holidays.

At CornerBank’s new facility, Samp has installed computers in the lobby for customers to do high-speed surfing on the Internet, plasma screen televisions for them to follow the stock market, and special teller windows with digital displays that allow them to see their account information.

Some bankers also suspect that the rates they offer on services such as savings accounts and business loans are better than in less competitive markets in the state.

But consumers might want to take advantage of it while they can. Several bankers said they would be surprised if the number of banks wouldn’t eventually shrink.

“I think there are definitely challenges for the smaller banks, especially if the growth they sought out doesn’t occur,” Haggart said. “If a particular branch isn’t breaking even, and that probably is the case with some, it will be hard to justify keeping them open.

“At some point you have to look at the market and see that you can’t get a large enough share to justify being here.”

Sutherland said he thought the consolidation would have begun three to four years ago.

“Eventually I’ll be right because some day we’re going to run out of sites,” he said, partially tongue-in-cheek. “After all, there are only so many street corners you can build on.” .