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The first major change came when Beloit’s Blackhawk Bank merged with Illinois-based First Mid Bancshares to form First Mid Bank & Trust about two and a half years ago. And now, earlier this year, Bank First Corp. completed its acquisition of the parent company of the First National Bank and Trust Co., remaking the three dozen branches across Wisconsin and Illinois as Bank First.

As banks continue to consolidate across the country, leaders at Bank First and First Mid say the impact on communities like Beloit and Janesville depends less on the mergers themselves — and more on what comes after.

“You always sit there and look at a bank acquisition or merger in the communities, it’s always looked upon as the negative. Understandably so,” Jim Pieschel, regional president for First Mid, said.

Pieschel, oversees the business and commercial banking and lending for southern Wisconsin and northern Illinois. He said banks have seen a ramping up in industry consolidation in banking in the last few decades.

That community concern is rooted in a long-term shift. The number of commercial banks nationwide has dropped sharply over the past several decades, from roughly 14,000 in the early 1990s to about 3,900 today, Pieschel said.

More consolidation is likely ahead.

“If you’re looking at bank A and bank B, one of those banks is going to be a different name in the next five years,” he said.

Tim McFarlane, bank president for Bank First, said he believes banks pursue mergers for strategy, not just for greater size.

“We don’t (grow) for the sake of growing. Being bigger isn’t better,” McFarlane said.

For communities like Beloit and Janesville, the worry isn’t just over name changes; it’s about whether local dollars stay local.

Pieschel said banks have followed past mergers by gradually pulling back from community lending.

“The acquiring bank wanted to do less and less in our markets, eventually to the point where they didn’t want to lend money. And they merely wanted to be a deposit-gathering hub,” he said.

In that model, deposits collected in smaller communities are often used to fund loans elsewhere.

“You might have a bank in Beloit … and customers come and have their deposits there. Well, those monies are then lent out in big cities all across the country,” he said.

Local shift

Local leaders involved in the recent transition from Blackhawk Bank to First Mid say their approach is different. They emphasize growth within the region, rather than retrenchment or diverting growth to big metro markets.

“The differentiator with this one — we actually want to grow,” he said. He points to plans to expand lending and staffing locally.

That includes hiring and increasing capacity to serve larger borrowers, something smaller banks can struggle to do on their own.

“If we could substantiate the need for growth, the bank would not be objecting to hiring more people,” he said. “We’re actively looking for folks right now, and that makes it exciting.”

Even as institutions grow larger, bank leaders say maintaining a “community bank” feel remains critical, particularly in how they serve small businesses, which they describe as the backbone of local economies.

“We have kept our same donation levels with what Blackhawk did,” said Kevin King, market president for First Mid for Rock County. “You don’t see that with a lot of these bigger type mergers.”

Focus on local business

King, who oversees the Beloit and state-line area, including areas around Madison and Milwaukee, said that beyond philanthropy, the distinction comes down to how banks interact with customers, particularly small businesses, as it remains central to the local economy.

King said that approach goes beyond philanthropy and comes down to day-to-day interactions with customers.

McFarlane said assessing the success of the recent merger should be measured on whether trust is maintained and if they deepen their relationships.

King added they’re regularly working with the Wisconsin Business Development Corporation and a similar development partnership in Rockford, Ill., to help startups and growing companies access financing. 

That approach reflects a broader philosophy of relationship banking, rather than transactional lending.

“We try to be very less transactional and do it more as a team approach,” King said.

Both King and Pieschel previously worked for Blackhawk and transitioned over to First Mid, which they said has been very positive in terms of lending capabilities and community reach. King said that the First Mid changeover has seen an expansion in the amounts the bank can now lend out and in the company’s overall footprint, which extends from Wisconsin, Illinois, Indiana, Missouri, Texas and Iowa.

He said while Blackhawk had about $1.5 billion in legal lending limits, First Mid now can lend up to $9 billion.

McFarlane said that philosophy extends across economic cycles.

“Our goal is to be steady and consistent and really not overreact,” he said. “We need to be there for our clients through cycles.”

That relationship-driven approach might be increasingly important as competition evolves. While the number of traditional banks has declined, competition has expanded to include credit unions, online lenders and out-of-market institutions able to operate remotely.

“You could have a bank in New York trying to broker a deal in Beloit … like they’re next door,” Pieschel said.

Despite broader economic uncertainty, they said demand in southern Wisconsin has remained strong, even as national headlines reflect caution.

“We had one of our best financial years ever … record growth, record earnings,” Pieschel said, attributing that performance to steady customer demand and disciplined lending.

McFarlane said that Rock County’s economy is stable and worth investing further in, with a "healthy mix" of agriculture and "steady business activity."

The bankers warn perception over the broader, national economic landscape can still shape national and local outcomes.

“You can have a self-fulfilling prophecy. People see things aren’t good … and (they) stop investing,” Pieschel added.

As consolidation continues and the banking landscape evolves, the central question for communities like Beloit and Janesville might not be whether banks change. Instead, it’s whether their role in the local economy changes with them.

“When it’s done well, there’s a lot to gain,” McFarlane said. “When it’s not done well, there are losses.”