Though Columbus is Ohio's capital and its third-largest metropolitan market, with a population of 1.5 million, it is also its most underbanked.
But that could be changing. Two new banks opened in greater Columbus last month, and two more are in the pipeline. Only two had opened in the Columbus area during the previous six years.
And unlike most start-ups, which typically go after commercial business, three of the four are targeting retail customers.
Bankers said Columbus is an attractive market for retail banking, because its population is growing, its economy is stable, and relative to other Ohio markets there are few branches per person. Ohio has also undergone a fair amount of consolidation in recent years, prompting investor interest in new banks.
"The greater Columbus market continues to experience unemployment levels below the national average and a growth in population, and there is not the concentration of banks as in other metropolitan markets," said Robert Palmer, the executive director of the Community Bankers Association of Ohio. "There is definitely an opportunity for new banks."
To be sure, the formation of four banks - with one branch each - is not going to change the market's dynamics much. But organizers are hopeful their brand of banking will catch on, creating demand for more branches.
Among the start-ups is Cooper State Bank, co-founded by William A. Cooper, the chairman and chief executive officer of the $12.6 billion-TCF Financial Corp. in Wayzata, Minn., and his son, William A. Cooper Jr., a Columbus resident. The senior Mr. Cooper is Cooper State's chairman, and his son is the vice chairman.
Cooper State opened for business Aug. 1 and like TCF is targeting working-class customers by stressing convenience. Its one branch, centrally located between four middle-class neighborhoods, is open seven days a week.
Mr. Cooper, who will be retiring as TCF's CEO in January, said there is a need for a small, retail-focused community bank in Columbus. Of the 10 other community banks based there, eight are primarily small-business lenders.
"It's one of the fastest growing markets in the Midwest, but it's relatively underbanked," Mr. Cooper said of Columbus. "And it's a desirable market, because they have the Midwest banking ethics where people save money and pay bills."
Benchmark Bank in suburban Gahanna also opened Aug. 1. The banks in organization are Insight Bank in Columbus, which applied for a charter last month, and First Bexley Bank in Bexley, which filed its application in March and is expected to open by yearend.
Benchmark's chairman, Jerry Caldwell, came to Columbus from South Carolina, where he started and sold two different banks. Most recently he sold the $614 million-asset Lighthouse Financial Services in Hilton Head to SunTrust Banks Inc. in June 2003.
Mr. Caldwell said he was attracted to Columbus mostly by the support its growing economy gets from state government and the state's largest university, Ohio State. Columbus is also the headquarters for several apparel retailers, including Limited Brands Inc. and Ambercrombie & Fitch.
Benchmark is targeting retail customers and emphasizing home loans, Mr. Caldwell said. "There are not as many ups and downs as there are in other parts of the state, and the housing growth has been spectacular," he said.
The 7.6% growth from 2000 to 2004 in the number of housing units in Columbus is on par with the rest of Ohio, according to the Census Bureau, but the cost of a single-family home is 16% above the state average.
The population grew 1.6% in the period, twice as fast as the state average, but bank branches have not kept pace. In the Columbus metropolitan area there is one branch per 3,176 people, according to Federal Deposit Insurance Corp. By contrast, Cincinnati, a market of comparable size, has 2,553 people per branch; statewide there are 2,901 people for every branch.
JPMorgan Chase & Co.'s acquisition last year of Bank One Corp. has also created an opportunity for new banks, the senior Mr. Cooper said. Bank One was based in Columbus until its 1998 merger with First Chicago NBD Corp. and was still widely viewed as a hometown bank, even after moving its headquarters to Chicago.
JPMorgan Chase still runs the Bank One operation under that name in Columbus, where it has the No. 1 deposit share. The branches will be rebranded Chase in the first quarter.
"When a big bank changes its name and there is a dislocation of customers, that always creates an opportunity for community banks," Mr. Cooper said.
A spokesman for JPMorgan Chase said it does not expect many customer defections because of the name change. He said the company has been assuring customers in Columbus and elsewhere that the name change will not affect service or its involvement in and commitment to its communities.
Mr. Palmer of the Community Bankers Association said bank organizers may also have been motivated by the success of another Columbus-area start-up. Prospect Bancshares Inc. opened in Worthington in 1999 and had grown to $210 million of assets by last November, when Sky Financial Group Inc. of Bowling Green, Ohio, bought it for $47 million, or 2.68 times book value.
First Bexley Bank's CEO, Martin Westfall, did not return phone calls, but according to a notice in The Columbus Dispatch it is organizing as a thrift that would primarily offer home loans and consumer products.
Insight Bank is being organized by a local developer, Don Kenney. According to the local business paper he and other organizers had applied to open Signature Bank a year earlier but then scrapped the plan. Insight is expected to focus on commercial real estate and small-business lending.
