The debut of two new bank brands in the Triangle market over the past year, coupled with a wave of new bank managers and owners, has upped the competition to win the hearts and wallets of customers.
“It’s a bubbling cauldron – bubbling over,” said Thad Woodard, president and CEO of the N.C. Banking Association. “It’s got to be one of the most competitive places on the planet for banking.”
Wells Fargo, which acquired Wachovia at the end of 2008 but didn’t retire the Wachovia brand until October 2011, has been adding staff at its 120 branches in the eastern half of the state to go along with a more robust suite of products and services. The bank has added an average of one person per branch since 2010 and plans to add another 45 employees next year.
Pittsburgh-based PNC Bank, which in March completed its $3.45 billion acquisition of Raleigh-based RBC Bank from Royal Bank of Canada, said earlier this year that it anticipated hiring more than 250 employees across North Carolina within 18 months. The new hires are needed for its expanded products and services and for reaching out to prospective customers.
Crescent State Bank, which was acquired by Raleigh-based Piedmont Community Bank Holdings last year, is moving into new markets with two acquisitions that will give it 30 branches in North Carolina – double the number it has today. Likewise, Capital Bank has dramatically increased its footprint under new ownership that took over in 2011.
“There is competition for business, there is competition for top talent, there is competition for good real estate, there is competition in the mortgage market,” said Crescent State CEO Scott Custer. “Wherever you look, there is plenty of competition.”
Slack demand for loans from credit-worthy customers also has the banks scrambling.
“There is so little loan growth they’re just fighting each other ... even in Raleigh-Durham, which is supposed to be one of the stronger growth markets in the Southeast,” said Bill Wagner, a Raleigh-based investment banker with Raymond James.
However, the anemic loan market has eliminated one type of competition that benefitted consumers in the past: Offering higher interest rates to attract deposits.
“The banks are cutting rates because they don’t need all that money because there’s not that much loan demand,” Wagner said. “But customers don’t have anyplace to go with their money so deposits are building up anyway.”
Recruiting takes priority
Recruiting productive loan officers is a priority for the banks, said Tony Plath, a finance professor at UNC-Charlotte.
“If you are good, you have your pick of banks,” he said.
“We just hired two (loan officers), one in Wilmington and one in Raleigh, seasoned guys, very capable,” said Larry Barbour, CEO of North State Bank, a community bank based in Raleigh. He added that both the new hires reached out to North State for a job.
The new entries into the market have lofty ambitions.
“PNC believes that if it can establish the market penetration in its Southeast market that it has in a mature market such as Philadelphia, we believe we can double the size of the business without acquiring another branch,” said PNC spokesman Fred Solomon.
Evaluating how the competition is shaking out in the Triangle market is difficult, even though the Federal Deposit Insurance Corp. publishes market share numbers based on deposits. The data should be taken with a large grain of salt because the deposits for regional and national banks can grow or shrink if banks shift deposits from one region to another for a variety of reasons. Moreover, an influx of funds from another region boosts the size of the overall market, which in turn cuts into competitors’ market share numbers.
In addition, deposit numbers don’t take into account important lines of business such as loans and wealth management.
To be sure, there’s no doubt that Wells Fargo has been and remains the No. 1 bank in the Triangle by a wide margin. Strictly by the numbers, Wells Fargo’s market share as of June 30 was 25.63 percent as of June 30, up from 23.87 percent a year earlier for the combined Raleigh-Cary and Durham-Chapel Hill.
Deposit shifts, increases
But drilling down into the data produces a fuzzier picture. The reason: Deposits at one of the bank’s branches in Chapel Hill jumped ten-fold from $93.5 million to $1.079 billion, accounting for a big chunk of its nearly $1.5 billion increase in deposits.
Wells Fargo spokesman Josh Dunn said that the increase stemmed from movement of funds into the market this year as a result of the Wells Fargo/Wachovia merger. But he said that the bank’s internal data, which excludes funds shifted from elsewhere, show that Wells Fargo’s deposits rose 5.7 percent year-over-year in the 51 counties in the eastern half of the state.
Jack Clayton, Wells Fargo’s regional president, said the bank benefitted from stability among its employee ranks.
“If you keep the people that the customers all like, in particular if you can keep the tellers they like, the customers stay with you,” he said.
Banks that didn’t fare so well in the latest FDIC data are quick to point out the data’s limitations.
SunTrust saw its market share fall more than any other bank in the Triangle, dropping from 9.38 percent to 8.24 percent, according to the FDIC.
David A. Stevens, the Atlanta-based bank’s regional president, stressed the “impreciseness” of the data.
“We look at a lot of different tools to determine how we are faring in a market ... and we feel like we are doing well,” he said.