Deposits in Chattanooga banks rose to double-digit levels for a second year in a row during the pandemic as government stimulus and increased savings increased the amount the Chattanoogans put in savings , in checks and CDs in local banks.
Despite the economic downturn and lower interest rates caused by the pandemic last year, total deposits at the 27 commercial banks operating in the metropolitan area of Chattanooga, which has 6 counties, increased by almost 1, $ 7 billion in the 12 months ended June 30, according to new figures released by the Federal Deposit Insurance Corp. (FDIC). The 13.7% gain in local bank deposits from 2020 to 2021 follows an even larger gain of 19.6% in total bank deposits in the Chattanooga market over the previous year.
The combined gains in deposits over the past two years at Chattanooga banks represent the fastest growth since the FDIC began tracking those numbers.
“We are seeing the influx of government stimulus packages pumping more money into the accounts of businesses and individuals,” said Colin Barrett, president of the Tennessee Bankers Association. “The US bailout continues to trickle down to many of our municipalities and I think we’ll have another campaign coming up next year. So I think we’re going to continue to see an increase in total deposits next year. and I don’t I don’t think it’s going to slow down. “
For Tennessee as a whole, bank deposits rose 10.3% in the past year to $ 213.1 billion after an even larger 20.4% increase in deposits the year before, according to the FDIC.
Federal stimulus packages, including Paycheck Protection Program loans and grants, expanded unemployment benefits, restaurant stimulus funds, stimulus checks, and expanded tax breaks and credits, have combined to inject more than $ 3 trillion into the US economy; and Congress is considering an even more ambitious $ 3.5 trillion infrastructure investment and pandemic recovery program.
As the government has added more money to the economy, many businesses and consumers have cut some spending, at least on travel, vacations and dining out, during the pandemic.
“In uncertain times, people tend to save more and with less activity to spend their money on both consumers and businesses, they’ve kept more money in the bank,” Jay Dale said, chairman of First Horizon Bank, the largest bank in the Chattanooga market with more than $ 3 billion in deposits.
Barrett said the pandemic has created a lot of uncertainty about the direction of the economy “and where there are a lot of unknowns, businesses and consumers tend to save more.”
With increasing deposits and some economic activity not yet returning to pre-pandemic levels, banks are competing more aggressively for lending.
“It’s definitely a competitive market here with 27 banks in that market, but luckily the economy in Chattanooga continues to do relatively well and overall I think the banking industry is relatively healthy and we continue to see growth in lending, ”Dale said.
The growth is happening even as the number of banks and the number of bank offices continue to decline.
Since its peak in 2009, when the Chattanooga area had 179 bank branches, the number of bank branches in the Chattanooga metro area has fallen nearly 20% with 35 fewer bank offices in the 6-county metro market. Bankers expect further cuts due to the acceptance and consolidation of online banking in the industry.
“The pandemic has shown many more people how to bank online and, as electronic banking continues to expand, we will likely continue to see fewer branches,” Barrett said.
The FDIC said that as of June 30, there were 176 commercial banks in Tennessee, but Barrett said that since March, eight acquisitions of Tennessee-based banks have been announced – the highest number of any state in the country. .
With interest rates near historic lows and new technologies and regulations creating advantages of scale for big banks, industry experts expect more banks to merge or be bought out in the future. .
“While mergers within the fragmented US banking industry are a decades-long trend, we believe persistent rates, low loan growth expectations and squeezing margins in the fee income segments will support further consolidation.” said Bain Rumohr, senior director of North American Banks for Fitch Rating Services.
But amid the consolidation trend, Chattanooga also got a new bank last year. Rock Point Bank, organized by a group of seasoned bankers in Chattanooga, raised more than $ 33 million in equity to create and open in March the first new bank in Chattanooga in 15 years.
Even with another bank, the number of bank offices has dropped by three in the past year and more have since been closed in the market.
Many of Chattanooga’s fastest growing banks have been those with a limited number of branches. In the past 12 months, Bank of America, which has just four branches in the Chattanooga metro area, has nearly doubled its deposits to $ 1.3 billion.
The three largest banks in Chattanooga remained regional banks operating in the Southeast, including the largest bank in Tennessee, First Horizon, the largest bank in Alabama, Regions Bank and the largest bank in the Southeast. , Truist Bank, resulting from the merger of SunTrust and BB&T.
Among the three largest banks, First Horizon remained the largest bank in Chattanooga with the most deposits while the regions experienced the fastest growth in the 12 months ended June 30.
Dale credited First Horizon’s long history in the market, its people and its products. Michael Mathis, Regions president for the Chattanooga market, said the Alabama-based Regions bank remains focused on its customers in the market “with the resources and technology of a powerful brand.
“Our local bankers are dedicated to helping our clients achieve their short and long term financial goals,” said Mathis.
Other local banks that have helped clients find PPP loans during the pandemic have also reported higher deposit growth over the past year, most notably Banque de Lafayette with a 20.1% increase in deposits. , Citizens Tri-County Bank with an increase of almost 16% in deposits, SmartBank with a gain of 15.6% in deposits and First Volunteer Bank with an increase of almost 14% in deposits.
Contact Dave Flessner at [email protected] or 423-757-6340.
The biggest banks in Chattanooga
Among the 27 commercial banks operating in the Chattanooga metropolitan area, made up of 6 counties, the largest banks, based on local deposits as of June 30, 2021, are:
1. First Horizon bank, $ 3.1 billion in deposits and a 22.3% market share
2. Truist Bank, $ 2 billion in deposits and a market share of 14.3%
3. Bank of Regions, 1.7 billion dollars in deposits and 12.2% market share
4. Pinnacle Bank, $ 1.4 billion in deposits and 9.8% market share
5. Bank of America, $ 1.3 billion in deposits and a 9.3% market share
6. Firstbank, $ 785.1 million in deposits and a 5.7% market share
7. First bank of volunteers, $ 616.7 million in deposits and a market share of 4.45%
8. Citizens Tri-County Bank, 497.7 million deposits and a market share of 3.6%
9. Smart bank, $ 466.2 million in deposits and 3.4% market share
10. The Bank of Lafayette, $ 308.9 million in deposits and a market share of 2.2%
Source: FDIC data on market share as of June 30, 2021.