December 2006 Balances of Power The FDIC’s annual report shows modest change and continued vigor in the state’s banking community By Katie Porterfield
Next year’s FDIC snapshot of deposit balances in banks across Tennessee could change significantly as a result of the recent Regions/AmSouth merger. The merged bank should have the second largest presence in the state, with more than 17% market share, according to new FDIC data.
But Terry Turner, Pinnacle president and CEO, says the merger will provide smaller, locally-based banks like Pinnacle with significant opportunities.
“Over the last five years, we’ve capitalized on moving market shares from large regional banks,” he says. “We compete with AmSouth, SouthTrust, Regions and Bank of America because they have the most clients and the most vulnerability. We capitalize on the consolidation-related turmoil of big banks.”
Mike Edwards, Tennessee banking manager for First Tennessee, which holds the number one slot across Tennessee as well as in the Memphis, Knoxville, Morristown and Johnson City metropolitan statistical areas, agrees that mergers and acquisitions distract large, out-of-state-based competitors. First Tennessee, he says, continues to focus on its communities, employees and customers.
“There’s no doubt that the banks that are growing
in Tennessee are First Tennessee and community banks,” Edwards says. “The reason community banks are growing is that they are, as a group, seen as Tennessee-focused; they’re focused on local communities. First Tennessee takes that approach. We’re like a very large community bank.”
In all, Tennessee’s 235 banking institutions recorded more than $101.96 billion in deposits this year, up $6.38 billion from 2005, according to the latest data from the Federal Deposit Insurance Corp.
Collected on June 30 and released each year in the fall, the FDIC’s deposit market share report is a one-day snapshot of deposit balances in banks across the country. While bank officials throughout the state caution that the report doesn’t provide an institution’s complete financial picture, most agree it’s useful for measuring market clout.
First Tennessee Bank lost 1.7% of its market share, but managed to lead the state once again with about $21 billion in deposits. There were, however, a few changes in the state’s top 10. While Home Federal Bank of TN dropped from number seven to nine and Bankcorp South Bank dropped from nine to 11, Branch Banking & Trust Co. jumped one spot to number seven and Pinnacle National Bank, leaping seven spots to number eight, made its debut in the top 10.
While the statewide market looks strong, it’s the Middle Tennessee market that’s attracting the most attention. The Nashville-Davidson-Murfreesboro metropolitan statistical area, which recorded $28.6 billion in deposits, grew by more than 13% between June 2005 and June 2006—a growth rate that trumped the nation’s 8.7% average.
“It’s a competitive market,” Edwards says. “It’s one that has a lot of good things going on and a lot of momentum, and it’s attracting people from around the country.”
The following breakdown highlights the changes in many of the state’s markets.
Memphis
The number of deposits in the Memphis market decreased from $26.95 billion in 2005 to $26.53 billion in 2006, and four more institutions came on board.
First Tennessee claimed more than half of the market in the Memphis metropolitan statistical area with deposits of almost $14 billion. Although the hometown favorite was down about 3% from last year, Mike Edwards, First Tennessee’s Tennessee banking manager, says the numbers can be a bit misleading because First Tennessee is headquartered in Memphis.
“The non-Tennessee part of our business fluctuated some and impacted the total deposits in our headquarters city,” he says. “But the Memphis area is growing market share, and more households are doing business with us this year. We continue to grow at a much faster rate than the state as a whole.”
Mississippi-based Renasant Bank jumped two spots to number nine, pulling ahead of Bank of Bartlett (#10) and Trust One (#11).
Nashville
Banking deposits increased $3.4 billion between June 30, 2005 and June 30, 2006 in the Nashville metropolitan statistical area, and 10 new banks joined the market this year.
After losing its longtime first-place slot to Georgia-based SunTrust last year, Alabama-based AmSouth found its way back to the top. AmSouth claimed 16.97% of the $28.6 billion banking deposits, and SunTrust, returning to second place, captured 15.7% of the market share.
Yet, despite the fact that AmSouth, SunTrust and two other out-of-town-based banks, Bank of America (#3) and Regions (#4), remained on top, they lost market share, while smaller, local banks, including Pinnacle, Tennessee Commerce, Capital Bank & Trust, and PrimeTrust Bank, grew their shares. Missy Williams, vice president of marketing for SunTrust in Nashville, says that although SunTrust was down 2.07% this year, they’re pleased to have grown their dollar deposit amount (from about $4.47 billion to about $4.49 billion) in such a competitive market.
“We’re very happy with our continued growth, and we also continue to grow in our other lines of business that aren’t’ reflected in market share,” she says.
Number six Pinnacle, which jumped three spots in 2005 and three more in 2006, was up 2.57% from last year and claimed 5.32% market share with deposits of more than $1.5 billion.
“We’re excited about the current market conditions and our ability to grow and the opportunities provided to us by large regional banks giving up market share,” says Terry Turner, Pinnacle president and CEO.
Turner says Pinnacle, which opened its first office in 2000, has capitalized on the poor service of large, regional banks and focused on providing effective financial advice to its customers.
“We built a $2 billion bank in five and a half years and never ran an advertisement,” he says. “When you think about the pace of that growth, it does say something about what’s going on in bank service quality. We’re hiring the best bankers and relying on word of mouth reputation to be one of fastest growing banks in the United States.”
Jackson
Mississippi-based Bankcorp South retained its number one spot with 23.7% of the market share, up from 23.31% in 2005. But with Regions in second place capturing 18.06% market share and AmSouth in third place capturing 13.03%, it might be difficult for Bankcorp South to maintain its position now that two and three have merged.
But Gary Grisham, president of the Bankcorp South’s Tennessee banking division, says although he respects his competition, Bankcorp South’s focus is on taking care of its customers.
“It really comes down to good bankers, good products, good locations and commitment to community,” he says. “It’s everything that you would want in a community bank. That’s what we stress every day.”
Community Bank joined Jackson’s market, bringing the total to 13 institutions, and the number of market deposits increased from more than 1.4 billion in 2005 to more than 1.5 billion in 2006. Grisham says the market is strong.
“I’m not sure these numbers are a real reflection of the growth that takes place here because what you don’t see there is a lot of off balance sheet deposits,” he says. “The industry only reports savings, checkings, money markets and CDs. There are other product types, like sweep accounts, repos and trust products, that aren’t included there that would tell a more complete story.”
Clarksville
Branch Banking & Trust Co. slid into first place, switching spots with this year’s number two, F&M Bank. BB&T increased its share from 10.83% in 2005 to 11.33%, while F&M lost market share, dipping from 11.78% in 2005 to 11.23% in 2006.
There are 15 institutions in the Clarksville market with almost $2.6 billion in deposits, a $2.3 billion increase from 2005.
Bank of America moved up five spots to number five. The North Carolina-based institution grew its market share 1.65% to capture 8.61% of the market.
Knoxville
Knoxville’s banking deposits totaled more than $10 billion, up from about $9.3 billion in 2005.
The Knoxville market is home to 29 institutions, gaining two since the release of the 2005 data. The 2006 top five is the same as last year’s, although the first, second, third and fourth institutions on the list lost market share, while number five, BB&T, increased its share. First Tennessee, SunTrust, AmSouth and Home Federal Bank of Tennessee lost a combined market share of 2.91%, and BB&T was up .76%.
Louis Moore, BB&T Tennessee group president, says it’s fairly hard to move significant market share in Knoxville because it generally has a good banking community. BB&T’s gain, he says, resulted from additional marketing efforts in the area.
“We have made a concerted effort to increase our presence in Knoxville through people resources and additional facilities,” Moore says. “We added a downtown office in mid-2004 that has really helped our numbers in 2005 and 2006.”
Chattanooga
SunTrust remains on top for the ninth year in a row, but lost .4% of its market share, while number two First Tennessee gained .5% market share. The top five remained the same, but like SunTrust, AmSouth and FSG Bank National lost share, while Northwest Georgia Bank gained headway with First Tennessee.
SunTrust, First Tennessee and AmSouth, however, still claim more than 58% of the market. Chattanooga gained one institution this year, and bank deposits totaled more than $7 billion, up from $6.6 billion in 2005.
Tri-Cities
The Kingsport-Bristol metropolitan statistical area recorded $4.1 billion in deposits, up from about $3.9 billion in 2005. Number one AmSouth lost 1.37% of its market share, while second place First Tennessee, along with First Bank & Trust Co., reported a slight gain.
In the Johnson City market, State of Franklin SB, which increased its portion of market share .52%, knocked AmSouth, which lost .4%, out of the top five. Elizabethton FSB switched places with Citizens Bank, which moved into the number three position, after First Tennessee (#1) and SunTrust (#2). Two new banks entered the Johnson City market this year, and together, the 18 institutions recorded deposits of $2.5 billion, up from about $2.3 billion in 2005.
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