When it comes to the world of banking, Lawrence residents are learning what other Kansas communities have known for a while: It is getting smaller.

Last month, Lawrence consumers watched while three banks with Lawrence ties announced mergers in the course of a week. Lawrence Bank announced it was merging with a bank it already owned in De Soto and changed its name to Great American Bank. Salina-based Sunflower Bank announced it was merging with a Colorado-based bank and trust company, and a name change may be forthcoming.

But the merger that drew the most attention locally involved Lawrence’s longtime Douglas County Bank striking a deal to merge with Missouri-based Metcalf Bank. In January, Douglas County Bank is expected to take on the Metcalf name, and 50 years of ownership by the Beach family, which is based in Lawrence and Hays, will end.

Those in the banking industry say the deal is a sign of the times, and has been for a while.

“A lot of Kansas banks already have considered their options and made the decision to consolidate,” said Chuck Stones, president of the Kansas Bankers Association. “The number of banks in the state has been declining.”

Over the past five years, the number of commercial banks in Kansas has dropped to 274, a decline of about 15 percent over the last five years.

The numbers may shrink even further because Stones and others in the banking industry said a new round of consolidation may be coming. Part of that is driven by increased regulations that require banks to undertake stricter reporting requirements and other compliance measures. The measures involve more administrative costs, which have caused smaller banks to look at merging with larger banks to gain efficiencies in their back office operations.

“The hoops that banks have to jump through to make a loan have really increased,” Stones said. “And those hoops increase a bank’s costs.”

Jan Wolcutt, a professor who teaches banking classes at the Barton School of Business at Wichita State University, said increased regulations probably are playing a role in bank consolidations. But she said smaller banks are facing other pressures, such as increased competition from Internet banking. She said the ability for consumers to make deposits online has made it easier for consumers to shop for the best rates for their deposits, regardless of where the bank is physically located.

“Consumers have a lot of alternatives out there, and that has been a challenge for banks,” Wolcutt said.

Wolcutt, though, said bank consolidation could end up having a negative impact on consumers when it comes to lending matters. She said consumers are still much more likely to need to deal with a local bank when it comes to getting a home or small business loan.

Larger issues with mergers, Wolcutt said, are changes in how banks make decisions about lending. A bank that is locally-owned likely will have a local bank president or local committee make decision on loans to make. A bank that is owned by an out-of-town group may require loan applications to be reviewed by executives in its corporate headquarters.

“A lot of that is really just going to depend on the culture of the bank involved,” Stones said. “Some banks will continue to allow the decisions to be made locally.”

Sometimes mergers that create larger banks can be advantageous in lending matters because the combined assets of the bank allow for greater lending limits. Pat Slabaugh, president of Douglas County, estimated his bank’s lending limit will approximately double following the merger, meaning the bank may be able to make some commercial loans that it previously would have had to decline.

Slabaugh also said a key reason the Beach family decided to sell the bank to Metcalf Bank was because it has a philosophy that fits with Douglas County’s community banking philosophy.

“All of our lending philosophies and how we grow the bank will remain the same,” Slabaugh said. “We will never outgrow our customers and the community we service. We never want our customers to feel neglected, and we won’t allow that to happen.”

Whether more changes are on the horizon in the Lawrence banking market is hard to know, local bankers said.

Wint Winter Jr. is the CEO of Peoples Bank, one of the handful of banks with its headquarters in Lawrence. He said he is seeing an increase in potential bank acquisitions, mainly because some banks are now undertaking a more aggressive growth strategy as the economy improves. Winter, though, said Peoples Bank has no plans to sell.

“We’re not caught up in all of that,” Winter said. “We’re still pleased to be local and sustainable. We think that is a good niche to be in.”

Great American Bank, formerly Lawrence Bank, also has its headquarters in Lawrence. Bank President Les Dreiling said he does expect acquisition talk to continue in the region. He said Great American Bank isn’t exploring a sale, but has been on the lookout for possible acquisitions.

“We have the capital to be able to look at some smaller, key acquisitions,” Dreiling said. “In today’s environment, you have look at ways to expand your client base and size, and acquisitions are one of those ways.”