Overall, big banks are getting bigger, but that has not deterred some smaller banks from growing deposit market share, even in cities where big banks dominate.
Despite common arguments that they operate at a competitive disadvantage to big banks, some community banks boosted deposits and took market share in cities like Boston, New York and Hartford, Conn., where Bank of America Corp. or JPMorgan Chase & Co. have top market share.
Smaller banks also managed to hang tough and keep top market share in the few metropolitan areas where they are the leading players, such as Kansas City, Mo., and San Antonio, Texas.
"Community banks are competing the way they always have, with a high-touch level of service and trying to get closer to customers through their technology," said Mark Fitzgibbon, an analyst at Sandler O'Neill & Partners LP. "Community banks can outrun big banks in building ties to individuals."
Deposits are a hot topic for banks, given soft loan demand. Banks that are able to make loans want low-cost deposits, while those struggling to lend tend to scale back on deposits.
New York is a good example of a market where smaller banks are ling deposits.
During the 12-month period that ended June 30, B of A, Capital One Financial Corp. Citigroup Inc., Toronto-Dominion Bank and Wells Fargo & Co. all lost share in the New York market, according to data from the Federal Deposit Insurance Corp.
In contrast, the $13.1 billion-asset Signature Bank posted double-digit deposit growth and increased market share. The New York bank's deposits rose 22.1% from a year earlier, to $10.9 billion, or 1% of the market.
"Signature has consistently taken share from big banks," Fitzgibbon said. "They're a very effective deposit-gatherer."
Sterling Bancorp, a $2.5 billion-asset company, also gained ground in the city. Deposits at the New York company rose 16.7% from a year earlier, to $2 billion.
John Millman, Sterling's president, said the bank gained share because bigger banks "seem to have more interest in working with much larger companies or providing" investment banking. "Our whole existence is to make credit available to that sector of the economy, to small and midsize companies," he said.
Joseph J. DePaolo, Signature's president and CEO, said deposit growth was tied to focusing on small and midsize businesses. He said the bank also benefits from assigning clients just one contact for all banking needs. "If you're a banker here, you can control the entire client experience," he said.
Not all big banks took hits; JPMorgan Chase grew deposits in New York by 18%, to $359.2 billion at June 30, capturing roughly a third of the deposit market.
Deposit growth in the Northeast United States largely outpaced the rest of the country.
"The economy has held up better here in the Northeast," Fitzgibbon said, adding that deposits surged by 15% statewide in New York and Rhode Island. Deposits rose 11% in Massachusetts and 6% in Connecticut, respectively.
In Hartford, B of A remains dominant. The Charlotte, N.C., company kept growing; its market share grew 3.77 percentage points from a year earlier, to 42.95%.
Still, two banks with less than $2 billion in assets were undaunted. First Connecticut Bancorp Inc., in Farmington, and Rockville Financial Inc., of Rockville, Conn., increased market share and deposits.
In Boston, Century Bancorp Inc. and Brookline Bancorp Inc. added deposits in another market where B of A is the top bank. Century, a $2.6 billion-asset company in Medford, Mass., grew deposits 10.8%, to $2.1 billion. Deposits rose 12.3% at the $3 billion-asset Brookline, to $1.9 billion.
Big banks are nowhere near as dominant in Kansas City, where two hometown banks swapped places as the city's biggest banks.
Deposits at UMB Financial Corp. rose 20.4%, to $5.9 billion. The $12.8 billion-asset company's market share reached 13.43%, giving the $12.8 billion-asset company the top slot in Kansas City. Commerce Bancshares Inc. also grew, but not enough to remain the city's biggest bank. Deposits at the $19.6 billion-asset Commerce rose 9.7%, to $5.4 billion.
Banks like UMB are well positioned to take market share from big banks, said J. Mariner Kemper, the company's chairman and CEO, in an interview Friday.
"We can play with big banks at the product level and we're also small enough that we can act like a community bank," Kemper said. "We really have no product gaps, so we're able to keep up with the big banks on their retail products, and corporate products, and cash-management product set."
Chuck Kim, Commerce's chief financial officer, said his company has benefitted from well-known troubles at big banks. "The fact that the big banks have fallen out of public favor and are trusted less than they used to be, that actually works pretty well for a bank of our size," he said.
In San Antonio, Cullen/Frost Bankers Inc. kept the top market share in the city. Among the 30-largest U.S. metropolitan markets, Kansas City and San Antonio are the only ones where the leading bank has less than $20 billion in assets.
