M&I bolsters lead among state banks

Marshall & Ilsley Corp. has strengthened its position as the state's most popular bank, but in some cities, community banks are grabbing a larger chunk of market share, a new report shows.

An annual Federal Deposit Insurance Corp. survey finds that M&I had more money on deposit than competing banks in four of Wisconsin's biggest cities - Milwaukee, Appleton, Janesville and Wausau - and was in a virtual dead heat with AnchorBank as the leader in Madison.

Overall, M&I had more than $18.3 billion in deposits as of June 30, the survey finds. That amounted to a deposit market share of 18.2%, which means that of every $100 on deposit with a bank in Wisconsin, $18.20 was in an M&I bank.

In the 2004 survey, M&I was the state's deposit leader with $16.6 billion, or a market share of 17.28%.

The deposit growth can be attributed to M&I's offering higher interest rates to savers in the past year, said Michael J. Steppe, partner and chief investment officer of Brookfield Investment Partners.

"This is probably the most aggressive rate-paying I've seen by M&I in the last 10 years," said Steppe, who monitors the strategy of Wisconsin banks.

For example, M&I this week advertised a 19-month certificate of deposit with an annual percentage yield of 4.50%. That is competitive with yields on CDs at two local financial institutions that typically have among the highest CD rates, Landmark Credit Union and Wauwatosa Savings Bank.

John Presley, M&I's chief financial officer, said the bank solidified its deposit base over the past year simply by "paying attention" to customer service.

"Some days, you're going to be a little higher in rates than the other guys, and some days, you are going to be a little lower, and hopefully, the differentiation is going to be the service and consistency you offer your customers," Presley said.

Although Milwaukee-based M&I expanded deposits, for some other large banks, their shares of the Wisconsin market slipped. Among them were U.S. Bank, Chase, Citizens Bank, Bank Mutual and Guaranty Bank.

David L. Donihue, a banking consultant with RSM McGladrey Inc. in Milwaukee, said the FDIC statistics indicate that big banks overall are losing market share to smaller banks - in some cases, much newer ones - that stress local decision-making and personalized service.

For example, 5-year-old Nicolet National Bank surged to No. 3 from sixth in deposits in Green Bay, leapfrogging ahead of Wells Fargo, Chase and Bank Mutual.

In Sheboygan, Community Bank & Trust, which was founded locally in 1989, moved past national giant Wells Fargo to become market share leader with 19.59% of deposits, up from 15.59% last year.

In Oshkosh, West Pointe Bank, started in 1996, increased its third-place market share nearly 2% over the past year and closed in on No. 2 AnchorBank.

"The community banks are here to stay and prosper," Donihue said.

But that is not to say that some big banks besides M&I didn't post gains.

Associated Bank grew in several markets by virtue of its acquisition of First Federal Capital Corp. of La Crosse. It jumped to No. 1 in La Crosse from ninth a year earlier, and it moved to third from sixth in the Madison market.

Associated increased a commanding lead in its hometown of Green Bay, posting a market share of 37.79% with $2.1 billion in deposits, up from 33.15% and $1.7 billion in 2004. Associated also was tops in deposits in Oshkosh.

Johnson Bank in Racine continued to dominate its home base with a 29.55% market share, and it increased deposits statewide to more than $2 billion.

What are people saying about mortgages today:

Rates on 30-year mortgages edged down last week to a seven-month low. Mortgage-giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages fell to 6.3 percent, down slightly from 6.31 percent two weeks ago. It put rates at the lowest level since they were at 6.24 percent the first week of March.

Bank of Hawaii, Central Pacific Bank, Territorial Savings Bank and Wells Fargo Home Mortgages all cut their 30-year mortgage rates to 5.75 percent this week.

Most people think of a mortgage as a means to an end. After all, you buy a house, not a home loan. But a mortgage is much more than the path to homeownership. It is a financial instrument that must be managed, just like any other financial investment.