Commerce Bank again has climbed atop the heap in deposits throughout the Springfield metropolitan statistical area, according to the Federal Deposit Insurance Corp.’s Deposit Market Share Report released Sept. 30.
With $1.18 billion in deposits, or 14.7 percent of the market share, Kansas City-based Commerce (Nasdaq: CBSH) reclaimed the top spot from Great Southern Bank (Nasdaq: GSBC), which fell to $995 million in area deposits, or 12.4 percent of the market, as of June 30.
Since 2010, Commerce and Springfield-based Great Southern have flip-flopped at the top spot each year. Previously, Great Southern was No. 1 in area deposits for nine consecutive years beginning in 2002.
Empire Bank held the third position in the Springfield MSA this year, with $908 million in deposits, or 11.3 percent of the market, while Guaranty Bank (Nasdaq: GFED) and Liberty Bank rounded out the top five with slightly more than 6 percent of the market.
Regional scopeThe annual report, which examined deposits at all FDIC-insured banks as of June 30, provides a glimpse into the makeup of MSAs from around the region and country.
In Springfield Business Journal’s analysis of seven metropolitan areas in the region, the Columbia MSA was easily the most competitive, with one banking institution for every 5,500 residents, followed by the Springfield and Wichita, Kan., MSAs, where the banks per capita ratio recorded was roughly one in 11,000. On the other end of the spectrum, the St. Louis metro has one bank for every 20,000 residents.
From one metro area to the next, however, the top banking players in terms of deposits are varied.
In Kansas City, UMB Bank is top dog in its hometown market, and Commerce is No. 2. UMB Financial Corp. (Nasdaq: UMBF) held $7.56 billion in KC-area deposits, which represents nearly all deposits in the Springfield MSA’s 41 institutions at that time, $8.04 billion. In Kansas City, UMB’s deposits represented 16.6 percent of the market, but locally, UMB is No. 21 with 1.2 percent of deposits.
In St. Louis, the deposit landscape is dominated by Scottrade Bank, which is based in St. Louis but gathers deposits online from across the country. Scottrade managed 19.3 percent of all deposits in the MSA, and at $16.8 billion, its deposits more than doubled the sum of Springfield-area deposits. Locally, U.S. Bank is No. 7., but came in second in St. Louis, with $13 billion. With $87.1 billion in deposits held at St. Louis-area banks, the market nearly doubled the closest MSA – Kansas City’s $45.6 billion – even though St. Louis has only two more banks at 137.
Bob Hammerschmidt, president of Commerce’s Springfield region, said while deposit volumes are an indicator of size, he’s more interested in indicators of strength.
“It’s nice to be No. 1 on the list, but staying on top is not a priority,” Hammerschmidt said of the bank that is No. 4 in the deposit-heavy St. Louis market. “Being strong, being profitable and growing is what matters most.”
In its third-quarter earnings release, Commerce increased net income 3.4 percent to $68.2 million, and loan volumes were up 12.6 percent to $10.7 billion in the quarter.
In recent years, Hammerschmidt said access to capital has not been a problem for bankers. Connecting with loan seekers, however, is becoming increasingly tough, not from brick-and-mortar competition, but, in part, because national institutions such as Scottrade underscore a new reality for traditional banks.
“Car loans used to be a staple of the banking industry. Your auto-specialty finance companies (such as) Chrysler Credit or Nissan Credit, those are the biggest competitors now for that segment of business,” Hammerschmidt said. “With real estate loans, there are a lot of specialty mortgage companies that are very competitive in home loans.”
Among the online mortgage companies gaining traction are Quicken Loans, LendingTree, AmeriSave and Capital One Home Loan.
In SBJ’s analysis, the greatest market penetration of a single bank was Boone County National Bank of Columbia, which has a stronghold on deposits representing 37.5 percent of the Columbia area’s $3.1 billion.
In Wichita, Kan., and Little Rock, Ark., North Carolina-based Bank of America (NYSE: BAC) rules the roost in terms of area deposits. Bank of America is No. 6 in the Springfield MSA, and it is No. 3 in Tulsa, Okla., where The Bank of Oklahoma is a dominant force, holding 31.2 percent of area deposits. Alabama-based Regions Bank (NYSE: RF) is No. 2 in Little Rock, but No. 16 in the Springfield area.
‘Swimming in liquidity’Kris Conley, Great Southern vice president and director of retail banking, said deposit volumes are important; they are just less important in the current economic environment.
“I can remember a huge push six or seven years ago to increase core deposits. The big reason we needed to increase those core deposits was so we could turn around and loan that money out,” Conley said. “None of the banks are loaning money out at the rate they were.”
According to the FDIC, banks nationwide have loaned $1 trillion less in the last six years. In December 2007, banks loaned $7.9 trillion and held $6.9 trillion in deposits. As of June, loans on hand were valued at $6.9 trillion, while deposits nationwide were at $9.4 trillion.
“Now, we are swimming in liquidity,” Conley said, adding the environment is on another cusp of change.
2012 was the first year two banks in the Springfield market posted deposits above $1 billion.
Conley said Great Southern is making strides in the St. Louis market, where it has gone from a loan center to seven banks during the economic downturn and is now No. 44 in the market. With more than 100 branches stretching from Arkansas to Minnesota, its second largest market is in Sioux City, Iowa, where it operates seven banks and manages 5.7 percent of the market’s deposits.
Hammerschmidt said regulations under the Dodd-Frank Act also have made banking profitability more difficult, regardless of the market. Limitations in overdraft fees and debit-card charges have large and small banks across the country scrambling to replace lost revenue.
“A lot of the regulations that have come down are dramatically changing the paradigm in the way we will operate going forward,” Hammerschmidt said, noting the rules should result in fewer banks in the Springfield MSA, exacerbating a trend toward mergers and consolidations that he’s witnessed throughout his 40-year career.[[In-content Ad]]
