The Valley’s top-10 banks appeared in a tight competition for market share among the region’s consumers, who appeared to take advantage of more choice as four of the area’s five largest banks lost deposits and saw some of their business shift to smaller institutions in the first six months of 2012.
Huntington National Bank remained at the top, however, growing its market share from 21.1 percent in 2011, to 21.9 percent this year. Huntington also was the only top-five bank in the Youngstown-Warren-Boardman statistical area to increase its deposits, which rose from 2011 to more than $2 billion.
Last week, The Federal Deposit Insurance Corp. released its annual report on market share, which tracks deposits and each bank’s place in all of the country’s major metropolitan areas.
First National Bank, PNC Bank, First Place Bank and the Home Savings and Loan Co. ranked second through fourth, respectively. All had modest declines in deposits between 2011 and 2012, while market share at each of the four banks declined by less than a percentage point.
“I would say out of all the banks operating in the [Youngstown] market, Huntington has taken a more- aggressive strategy on growing retail-customer banking and providing convenience in terms of physical location,” said Terry McEvoy, senior bank analyst at Oppenheimer & Co.
In response to closer regulations, McEvoy said Huntington instituted a series of retail-banking programs such as its 24-hour grace period and asterisk-free checking that help consumers avoid overdraft fees and other charges.
“One of the things driving this momentum is what we call fair-play banking,” said Frank Hierro, regional president for the Mahoning Valley at Huntington Bank. “We took it upon ourselves to seriously listen to customers and employees about what nuisances or aggravations we could take action on, and that’s really helped the bank attract new customers and keep our existing customers happy.”
Hierro added that the bank’s Giant Eagle locations, open seven days a week, have created more convenience for customers. At the same time, the bank has experienced growth on its business and commercial banking side, and remains the region’s No. 1 U.S. Small Business Administration lender as well.
Meanwhile, the Valley’s smaller banks seemed to benefit from losses at the top of the rankings. Farmers National Bank saw a significant increase in deposits, and it moved upward to sixth in market share with 8.1 percent, gaining almost a full percentage point. Other smaller banks ranked in the bottom five all gained market share and deposits.
“I think community banks like ours recognize customers when they come in the door,” said John S. Gulas, president and chief executive of Farmers. “We’ve positioned ourselves to focus more on our customers, associates, shareholders and the community, and they recognize we’re a safe place to bank, and they’re rewarding us for that.”
McEvoy said a shift has occurred in recent years with more customers shifting to smaller banks across the country, but he cautioned not to read too much into the numbers.
“Given that the industry is flush with liquidity and deposits, in my mind it’s not a red flag when you see these slight shifts in market share and deposits,” he said. “For that matter, from an analyst’s perspective, it’s nothing to be concerned about for some of these bigger banks.”
Overall, according to the Office of the Comptroller of the Currency, core deposits grew rapidly and reached a record level at the end of 2011. At the largest banks, which were most affected by liquidity concerns during the financial crisis, core deposits increased from 36 percent of liabilities to almost 57 percent in 2011.