U.S. Bank eyes expansion in crowded Texas, Southeast markets

As it embarks on a retail expansion, U.S. Bancorp is betting that it has the heft — and the brand recognition — to compete for deposits in states where its biggest rivals have dominant market share.

Speaking at an industry conference in New York, Chief Executive Andy Cecere on Thursday said that the Minneapolis company is eyeing expansion in four states where it currently has no retail presence: Texas, Florida, Georgia and North Carolina.

The plan is not to blanket those states with branches, but rather open a handful of them and then aggressively market its digital offerings to residents — particularly those who may already have a credit card, mortgage or car loan with U.S. Bank.

“The fact is we have over 3 million customers in the United States, who are customers of our national businesses — mortgage, credit card, indirect auto — but are not full depository and other service customers,” Cecere said at the conference, which was sponsored by Barclays. “We believe we can enter new markets like Texas and Florida and North Carolina with a few branches, leveraging those current customers and our digital capabilities.”

U.S. Bank is the nation’s fifth-largest bank, with $461 billion of assets and about 3,100 branches in 25 Western and Midwestern states. It is “early in the process” of adding branches in the four states and obtaining the necessary approvals, according to a company spokesman.

In entering Texas and the Southeast, U.S. Bank is looking to gain a foothold in deposit markets where megabanks, including Bank of America, JPMorgan Chase and Wells Fargo, largely dominate.

In Texas, for instance, JPMorgan and BofA hold the highest share of deposits, according to the Federal Deposit Insurance Corp., at 21.9% and 14.4%, respectively. In Florida, meanwhile, BofA and Wells Fargo lead the pack, at 19.2% and 14.1%, respectively.

Still, all banks are hungry for deposits, and Texas and the Southeast are seen as attractive markets because they are home to many of the nation’s fastest-growing cities. Fifth Third Bancorp in Cincinnati, for example, recently announced plans to add more than 100 branches in such hotbeds as Atlanta, Nashville, Charlotte and Raleigh, N.C.

During his presentation, Cecere said the advantage of U.S. Bancorp’s strategy, to play up its digital offerings and add only a few branches, is that it’s a “cheaper” way to acquire new customers than making a big acquisition.

“If I bought 100 branches, I’d have to pay a premium on those deposits,” Cecere said. “It would be substantial.”

The retail expansion, notably, highlights how Cecere is making his mark at U.S. Bancorp, after taking the helm last year.

Nearly two years ago to the day, at the company’s September 2016 investor day, then-CEO Richard Davis said he had no plans to add branches or expand in states where it didn’t already have a top market share.