Nevada State Bank's president thinks grocery stores are too harried and don't have the professional atmosphere consumers want from their bank.
US Bank executives, on the other hand, believe grocery stores provide unparalleled access to lots of consumers every day and branches in grocery stores can drive a lot of new business.
The contrasting philosophies about grocery-store banking a much-discussed subject in the banking industry came into the spotlight last week as US Bank struck a deal to take over the leases on Nevada State Bank branches in Smith's Food & Drug stores.
The deal includes five locations in northern Nevada bank offices in Smith's stores in Reno, Sparks, Carson City, Gardnerville and Dayton.
Those locations are part of a bigger agreement in which Minneapolis-based US Bank will take over branch banks in 49 Smith's locations in Nevada and Utah from Nevada State Bank's sister institution, Zion's Bank.
Dallas Haun, president of Nevada State Bank, said the company's decision to get out of the branch locations in Smith's stores marks a corporate change in strategic direction.
Nevada State Bank, he said, now believes that freestanding branches provide a quiet, professional atmosphere that's not available inside grocery stores.
The company has invested $43 million in new freestanding branch locations in Nevada, he said, and most of the branch offices in Smith's stores are within a couple of miles of a traditional Nevada State Bank location.
The deal with US Bank involves only the leases not the deposit and lending relationships of the branch locations.
US Bank, meanwhile, sees bank locations within grocery stores as a way to quickly boost its presence in Western markets, said Chuck Stroup, US Bank's executive vice president for in-store and on-site banking.
The company currently has 550 branches inside stores, expects to have 580 by the end of the year and will top 600 once the conversion of the branches inside the Smith's stores is completed early next year.
And US Bank views in-store branches as a critical part of its growth strategy in coming months.
Branches inside grocery stores and other retailers can be openly quickly and less expensively than traditional branches, Stroup said, and provide access to a heavy flow of consumer traffic.
But he said US Bank has learned that it can't run grocery-store branches in the same way as it runs traditional locations.
"We manage them differently," he says. "It's a different kind of operation."
For instance, he says, managers of traditional banks can comfortably stay behind their desks, knowing that anyone who comes in the front door probably is looking for some sort of bank service.
In a grocery environment, however, it's critical for the bank staff to get out among grocery customers.
"You have to be more proactive in your sales approach," Stroup said.
US Bank also has learned to staff in-store branches with universal bankers folks who are comfortable with handling all the bank's services instead of specialists.
Other banks, too, see potential to grow their presence inside grocery stores and other big retailers.
"It's an incredible strategy for us," says Chad Osorno, Wells Fargo's regional president in northern Nevada.
"It's a wonderful way for us to serve customers when and where they want to be served."
Wells operates eight in-store branches in northern Nevada and around Lake Tahoe.
In some instances, Osorno says, grocery branches allow Wells to move quickly into a community and provide a relatively low-risk way to determine if markets can support traditional freestanding markets.
Around Lake Tahoe, meanwhile, tight restrictions on development of new buildings mean that branches inside existing grocery stores are about the only way for Wells Fargo to easily get into promising markets.
