The Bendigo Bank branch in Shellharbour Village will close for good next month.
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The board of Oak Flats Financial Services, which operates both the Shellharbour and Oak Flats Community Bank branches, has decided that the branch in Addison Street will close permanently from March 14 when its lease expires.
It is understood the shop's owner has other plans for the site.
A Bendigo and Adelaide Bank spokesperson said the bank supported the decision to permanently close the branch "given the complexities and costs associated with finding and fitting out an alternative location that is appropriate for service as a bank branch".
"This decision also takes into consideration the relative proximity of other branches in the local network and other nearby over-the-counter banking alternatives," they said.
Bendigo Bank's Community Bank model was established in the 1990s for communities at risk of losing face-to-face banking.
The bank spokesperson said customers could do banking in-person at the Oak Flats branch in Central Avenue, or the Gerringong branch in Fern Street.
They said customers could also take cash out, make deposits and pay bills at the Australia Post shop in Addison Street.
The spokesperson said staff at the branch would be redeployed to other local bank branches.
"Bendigo Bank and Oak Flats Financial Services remain committed to the Illawarra region and will continue to provide local employment opportunities and return profits to local communities," they said.
Community Banks are owned by local entities with the backing of Bendigo Bank, and a portion of profits go back to their communities; the Bendigo Bank spokesperson said Oak Flats Financial Services had reinvested $3.5 million in local initiatives.
Shellharbour resident Hetty Cummins said she was "really disappointed" in the bank's decision to leave Shellharbour Village, worried it was a harbinger of a broader downturn in activity for the area.
"I'm very concerned that this is only the beginning of the village becoming a ghost town," Mrs Cummins said.
She pointed out that news of the closure came after Shellharbour City Council installed signage directing people to Shell Cove, which village business owners saw as the council prioritising the newer area over their neighbourhood (the council later changed the signage) and ahead of the relocation of Shellharbour Village's library to Shell Cove.
Bank branch closures are a growing phenomenon: the most recent data from the Australian Prudential Regulation Authority shows the number of branches in NSW dropped from 1334 to 1192 in the year to June 2023, a decline of almost 11 per cent.
Most recently in the Illawarra, St George closed its Wollongong branch in July 2023.
A Senate inquiry examining bank closures in regional Australia remains underway, with submissions reopened until February 29.