Banks usually have an easy target when they’re seeking a key location for commercial and retail loan operations in a city: downtown, where shops and businesses of all shapes and sizes congregate.

With Bend, however, that equation isn’t so simple. There’s also the Old Mill District, with its own concentration of activity.

Each area is a tempting choice for banks. Some choose both. The choice depends on banks’ market strategies.

Nine banks have branches either in or directly adjacent to a three-block area downtown, with a 10th — Spokane, Wash.-based Sterling Savings Bank — only a few blocks away.

In the Old Mill, four banks have active branch or mortgage operations directly adjacent to the shops, while several others can be found across the Deschutes River.

Banking industry officials said the two neighborhoods, while both commercial and retail hubs, have key differences that influence how each bank determines where to focus its efforts.

One of those differences, one official said, is the availability of commercial space. Many banks needed more space for private banking services as Bend’s growth exploded in the past five years, and that space often isn’t available downtown.

“Downtown is pretty built out, and there isn’t a lot of space,” said Mike Sventek, district manager for Wells Fargo Bank’s East Cascades district, which includes Central Oregon. “You see new developments, but that also involves tearing down older buildings. Old Mill isn’t 100 percent developed, and there are many points of contact with residential neighborhoods, so it’s easier (for cars and customers) to get in and out.”

The availability of space for newer business banking centers in the Old Mill is represented by the banks starting or expanding operations there.

Wells Fargo, for one, has a private client services office in Old Mill under construction. The location is scheduled to open in late September.

“It’s a different type of service,” Sventek said of the branch. “There are no ATMs, no deposit services, and it’s not a conventional retail branch. Clients tend to be there for two hours or more, and we know that customers will be there longer, so convenient parking, ingress and egress is very important.”

Klamath Falls-based South Valley Bank also is growing in the Old Mill.

Bill Castle, South Valley’s president and CEO, said the bank is expanding its commercial lending hub there to 16,000 square feet. The project should be done in six to eight months.

“That shows how bullish we are on the Old Mill as a business,” Castle said. “Downtown has more compact retail and foot traffic, and there’s nothing wrong with that. But the price for space downtown has escalated past, in our opinion, what would warrant the investment (of a branch) there.”

The Dalles-based Columbia River Bank also concentrates its business and commercial lending operations at its Old Mill office, according to Mike Anderson, senior vice president and regional manager.

“Our branch downtown is more of a hub,” Anderson said. “It has much more foot traffic. Our commercial lending operation has historically been in the Old Mill area, and a big reason for that is parking. We’ve kicked around the idea of moving that to downtown, but convenience is an issue, and that’s why we hesitate to do that.”

Approaches vary

Eugene-based LibertyBank has branches downtown and in west Bend, and officials feel the locations provide more than adequate coverage for the Old Mill District.

“We look at both the downtown and Old Mill as one area, and we can serve both from our downtown location,” said Paul Stednitz, vice president and Central Oregon area manager for LibertyBank. “We also have our branch (on the west side), and both branches are about 1 1/2 miles from Old Mill, and we feel that we can cover the area and provide the convenience.”

LibertyBank previously had an ATM in the Old Mill shopping area, but recently removed it.

“Any ATM in any shopping area has become less attractive,” he said, noting that customers are increasingly buying items and services directly by credit or debit card.

Bend-based Bank of the Cascades has its headquarters downtown, so its commercial lending activity is concentrated there, said Julie Miller, the bank’s executive vice president and regional manager.

The bank noticed a difference, however, in retail foot traffic in its downtown branch when it opened its Old Mill location four years ago, Miller added.

“When you look at business growth, Old Mill has a lot of dental, medical, retail and long-term businesses moving in from elsewhere, and it felt appropriate for us to look at that market,” she said. “What we noticed is that many long-term customers started using our Old Mill branch immediately. We definitely noticed a shift from the lobby foot traffic downtown. But many customers are simply shifting from one branch to the other, and as long as we’re not losing any business, we’ll look at our situation and shift resources to the appropriate place.”

Miller also noted that Old Mill, with its larger concentration of national retail stores, has created new business opportunities for the bank.

“There are definitely more large, national chains in Old Mill, whereas downtown businesses are more locally owned,” she said. “But we’ve found that large national chains are increasingly looking for local partners, and that piece of business is essential, and that trend is different from what we’ve seen traditionally in years past.”

Banking officials said both districts are vital to a bank’s success in Bend’s commercial lending market, despite their differences.

“All the buildings (in or near the Old Mill) have about 50 to 150 employees each, and that’s very attractive for a bank,” said Columbia River’s Anderson. “Downtown businesses are more retail-oriented, and their banking needs are transaction-based by nature, while borrowing needs are usually a little less. But we want the deposit business, and we want the small-business lending there, so we have to be active in that market.”

Bank of the Cascades’ Miller said that while the demographics vary at each location, the two areas complement each other well in Bend’s commercial development.

“We see more consumer-based business at Old Mill, where downtown sees more main business clients,” she said. “But tourists visit both, and they’re really two diverse business communities supporting each other.”

Ultimately, banks will determine their focus based on convenience, said South Valley’s Castle. But where that premise takes them, he added, is up to each bank’s definition of convenience.

“Globally, when banks do surveys of why customers bank there, the number one answer every time is convenience,” Castle said. “Downtown is a great destination for people to drive there, park, and walk around, but people don’t always feel like driving through (that foot traffic). People associated the Old Mill as a business center, so it works well for us.”