Banks everywhere and always changing

The Commercial Appeal (Memphis, TN)
Community banking industry drives multiplying institutions

Date: December 29, 2006
Section: Business
Page: D1
Source: Cathryn Stout (stout@commercialappeal.com)
Edition: Final

When William Chase entered the banking industry in 1978, there were about eight chartered banks in Memphis. Today there are more than 50.

Much of that growth has been spurred by the community banking industry, and 2006 saw its share of multiplying community bank branches.

Chase joined the trend this year as president and CEO of Triumph Bank, which opened its first office in June at 2171 Judicial Drive in Germantown.

“We’re the third bank that has been in this space,” he said. “The whole landscape of banking is changing.”

Keeping up with the number of banks in Memphis is like playing a game of Tetris. As one group merges, new pieces rapidly enter the market.

Mergers and acquisitions over the last two years have combined more than half a dozen banks into larger corporations. Community banks are filling the void for locally-based institutions.

“As banks merge, the decisions that are made that affect the customers are made further and further from the customer,” said Chase, explaining that Triumph’s long-term plan is to stay locally owned and operated.

“We’re not a build and flip model,” he said.

“Build and flip banks” refer to banks that amass enough real estate and market share to attract buyers.

Whether some of the newer community banks will follow Union Planters, SouthTrust or AmSouth on the road to acquisition remains to be seen, but this year many small banks quickly increased their footprint across the Memphis market.

Once called boutique banks because of their modest real estate, community banks made substantial capital investments this year with numerous new bank buildings in the works across Shelby County.

In April First Capital Bank, formerly First Source Bank, bought a site on Poplar and Reddoch with plans to build a new branch.
Trust One Bank, an affiliate of Georgia-based Synovus, is considering additional offices in Germantown and Downtown.
Little Rock-based Pulaski Bank & Trust Co. opened its second branch in Shelby County this year, and 22,000-square-foot building in Germantown.
FirstBank, the 100-year-old bank based in Lexington, Tenn., is renovating a 5,000-square-foot office at 8398 U.S. 64 in Bartlett.
Landmark Bank, known as MemphisFirst Community Bank until its name change in May, opened new offices in Germantown and Collierville in 2006 and is renovating a building in Whitehaven.

John Blaylock, associate director of Texas-based Sheshunoff & Co. Investment Banking, attributes the local boom in community banking to the growth of the suburbs.

Community banks constitute 95 percent of all banks, according to the trade organization Independent Community Bankers of America. But some community banks, especially in shrinking pockets of rural America, are feeling pinched rather than prosperous.

However, the affluent and expanding populations of towns like Germantown and Collierville make them ideal locations for bank offices and headquarters.

As 2007 is sure to see newer banks rush to increase their customer base and mature institutions branch further into the Memphis market, Jim Ross a former top executive with Leader Federal Bank for Savings and cofounder of PathFinder Consulting Group, offers a word of caution.

“The trend that we saw at Leader in the mid-1980’s was that the middle-size banks are not going to survive,” Ross said. “Either you’re going to get bigger or you’re going to get smaller, and over the last 20 years that has proven accurate.”

- Cathryn Stout: 529-2320

Photo by Lance Murphey
Caption: An old vault from Nashville will serve as the vault of the independent Triumph Bank, 5699 Poplar, where lifelong Memphian Will Chase Jr. is president and CEO. The $2 million facility will have a nontraditional look and will feature a coffee bar and Internet care for customers.

Copyright, The Commercial Appeal, Memphis, TN. Used with permission.
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