Tennessee Bankers Association LBE event on August 14, 2018. Photos by Donn Jones PhotographyFor the first time in a decade, Chattanooga added more banks and bank branches despite record merger activity across Tennessee in recent years.
Bank deposits in metropolitan Chattanooga during the 12-month period ended June 30 rose a mere 0.3 percent to $9.74 billion among all banks with offices in the 6-county region, the Federal Deposit Insurance Corp., said in a new deposit market share report. That was the slowest growth for bank deposits in Chattanooga since 2012 when overall deposits in the market dropped in the wake of the Great Recession.
The sluggish growth in overall deposits came despite the entry into the Chattanooga market of two new banks. First Citizens National Bank of Dyersburg opened an office near Hamilton Place mall last September and BancorpSouth Bank of Tupelo, Mississippi opened a downtown Chattanooga bank branch in March.
Biggest banks in Chattanooga
Among the 28 banks operating in the 6-county Chattanooga metropolitan area, the biggest banks are:1. First Tennessee Bank, $2.36 billion in deposits, 24.2 percent market share2. SunTrust Bank, $1.65 billion in deposits, 16.9 percent market share3. Regions Bank, $1.26 billion in deposits, 12.1 percent market share4. Pinnacle Bank, $686.3 million in deposits, 7.05 percent market share5. Bank of America, $516.9 million in deposits, 5 .3 percent market shareSource: FDIC
At the end of last year, SmartBank of Knoxville, which merged with Cornerstone Bank in Chattanooga in 2015, acquired Southern Community Bank of Tullahoma, which operated a downtown Chattanooga branch.
The net effect of the acquisitions and expansions has left Chattanooga with 28 banks in the market, or one more than the previous year. Collectively, those banks operated 148 branch offices in metro Chattanooga, or two more than the previous year.
"Chattanooga is a competitive market and I think our strong economy is attracting more business and more banks interested in doing business here," said Jay Dale, president of First Tennessee Bank, the biggest bank in both Chattanooga and the state as a whole. "Deposits can fluctuate on any given day, but we're proud to be the market leader again this year. First Tennessee knows that customer loyalty is hard-earned and must be well-deserved."
The three regional banks that have long been the market leaders in Chattanooga all reported a drop in deposits in the 12-month period ended June 30 as smaller banks appear to have gained some of the local market.
Biggest banks in Tennessee
1. First Tennessee, $24 billion in deposits for a 15.5 percent market share 2. Regions, $18.7 billion in deposits for a 12.1 percent market share 3. SunTrust, $13.9 billion in deposits for a 9 percent market share 4. Pinnacle, $12.3 billion in deposits for a 7.9 percent market share 5. Bank of America, $11.3 billion in deposits for a 7.3 percent market share Source: FDIC deposit market share as of June 30, 2018
In Chattanooga, First Tennessee deposits as of June 30, 2018 were down $122.5 million from a year earlier, although First Tennessee remained the No. 1 bank for deposits in Chattanooga as it has since it overtook SunTrust Bank for total deposits in Chattanooga in 2010.
SunTrust Bank, the No. 2 bank in Chattanooga for deposits and the bank with the most local branches, reported $122.2 million less in deposits as of June 30, 2018 than it had a year earlier. Regions Bank reported a $46.4 million decline in total deposits compared with a year earlier.
Over the past decade, however, deposits in all Chattanooga banks still grew by more than 27 percent even while the number of branch offices fell by 14 percent. From the peak of 179 local bank branches in 2009, local banks have pruned those branches down to 148 today in the Chattanooga market.
Statewide, bank deposits in Tennessee grew by 4.9 percent over the past year to $154.9 billion even though the number of banks operating in Tennessee dropped from 199 in 2017 to 189 this year, according to the FDIC.
"The industry has changed significantly and as our economy continues to be healthy and growing, banks could use even more deposits to meet the loan demand in our state," said Colin Barrett, president and CEO of the Tennessee Bankers Association. "Our small banks make more than 50 percent of the small business loans in America and while our banks are adding online services, banking is still built on personal relationships."
In the past 48 months, there have been a record 45 bank mergers and acquisitions in Tennessee, which Barrett said has helped reduce the number of separately chartered banks to less than half of the peak levels a few decades back before interstate and cross-county banking was allowed as easily as today.
Nationwide, FDIC data analyzed by the American Bankers Association said 4,833 banks operated nationwide as of June 30 - or only about third of the 12,343 banks that operated in the United States in 1990.
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340