TC Banking Market Growing, Hotly Competitive

Banks seem to hook up with new partners faster than Hollywood celebrities, changing their names and often confusing their customers who feel they’re already dealing with enough financial upheaval in their lives.

But most of the major players in the local banking market have been around for years, although there have been a number of significant changes in a business that has been growing steadily. Cincinnati-based Fifth Third Bancorp, which acquired Old Kent Financial Corp. in Grand Rapids 16 years ago, has been the market leader in Grand Traverse County under several names for decades, based on the size of its deposits.

Fifth Third had $538,432,000 million in deposits in the county as of June 30 and controlled 26.52 percent of the market, according to figures from the Federal Deposit Insurance Corp (FDIC). That’s up from 24.15 percent in 2014, but down from 2006 when Fifth Third controlled nearly a third of the local market. Huntington National Bank and JPMorgan Chase Bank also have been among the market leaders locally over the past decade.

“A lot of our market share comes from corporate commercial accounts,” said Bruce Bussey, Fifth Third’s financial center manager in Traverse City. “We’ve been the leader there for quite some time.”

But the biggest change in the local banking scene has been the entrance of Midland-based Chemical Financial Corp., which roared into town by acquiring Northwestern Bank in Traverse City for $120 million in 2012. Northwestern Bank ranked second in market share in Grand Traverse County in 2011, with deposits of $362,591,000.

Chemical then bought Lake Michigan Financial Corp, which owned the Bank of Northern Michigan in Traverse City, for $184 million last year. Chemical now is the second-largest bank operating in Grand Traverse County, with deposits in the county of $439,874,000 and a 20 percent market share as of June 30.

Scot Zimmerman, Chemical’s community bank president in Traverse City, said Chemical focuses on providing a broad array of banking services in smaller communities like Traverse City.

“It has great banking franchises in small towns,” he said. “It’s local, community-minded and provides services efficiently. It’s a business model that allows Chemical to service its communities very well.”

Chemical Bank, which has grown rapidly through acquisitions to become the second-largest Michigan-based bank in the state, in August completed a $1.7 billion merger with Troy-based Talmer Bancorp, which was the third-largest Michigan-based bank. The merger will bolster Chemical’s financial position and help better serve Chemical’s customers in the Traverse City market, Zimmerman said.

“I see Chemical investing more in Traverse City. It will be great for the community, employers and customers,” he said.

Traverse City State Bank has held steady in the fifth spot in the deposit rankings for the past 10 years. But in that time period, its deposits have grown 41 percent, from $159,878,000 in 2006 to $225,366,000 this year. Its market share has grown from 7.41 percent in 2011 to 10.25 percent this year.

“That demonstrates the commitment of Traverse City residents to community banking,” said CEO Connie Deneweth. “Banking is private and personal. There’s a high degree of comfort knowing your money stays local.”

Traverse City State Bank was founded by local bankers in 2000 after the original Traverse City State Bank was acquired by Pacesetter Financial Corp., eventually becoming Fifth Third. It specializes in residential lending, business banking and local government lending.

But huge banks that operate nationally, such as JPMorgan Chase Bank, say they also have a role to play in community banking. Chase ranks as the fourth-largest bank in Grand Traverse County with deposits of $328,360,000 million as of June 30. It controls 14.93 percent of the county market.

Brad Haverkamp, vice president of business banking at Chase in Grand Rapids, said Chase’s size allows it to offer customers the latest technology in banking from mobile devices, a fast-growing segment, while also specializing in providing financial advice through its JPMorgan financial services firm.

“Baby boomers are moving into retirement age and they want advice on investments,” said Haverkamp, who oversees the Traverse City business banking team. “We’ve really worked to make our branches advice centers and have converted four of our branches into Chase Private Client branches.”

While there has been a lot of consolidation in the banking industry, Grand Traverse customers have nearly as many banking choices today as they did in 2006. There are 11 banks serving the county, just one less bank than a decade ago.

Bankers say the growth of the region makes it a lucrative market to exploit and one that is hotly competitive. Total deposits at area banks have grown from $1.7 billion in 2006 to $2.2 billion this year, a nearly 30 percent increase.

The banks not only fight for market share among themselves, but face a growing threat from credit unions that offer a wide array of banking services.

“It’s extremely competitive,” Deneweth said.

Comments

comments