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Bank of America retakes top spot in market share

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By Joe Rauch
October 30, 2005

JACKSONVILLE -- One banking conglomerate has passed another to assume the top deposit market share position in what has become one of the nation's fastest growing banking regions.

But the shift isn't clear cut.

Bank of America has become metropolitan Jacksonville's largest bank, with 32.3 percent of the market and $8.1 billion in deposits, according to data released Oct. 18 by the Federal Deposit Insurance Corp. The bank replaces its primary competitor, Wachovia Bank, which is now second in Jacksonville with 29.7 percent market share and $7.4 billion in deposits.

But Bank of America's leapfrog over Wachovia by nearly $1 billion in the market, along with Wachovia's growth, is skewed by how banks report their market share data to the FDIC, and what can be considered as deposits in a given market. The result is a market survey that is more like a blurred photo than a clear snapshot of the state of banking in the Jacksonville region.

Bank of America's deposits grew in the Jacksonville market by 47 percent from 2004 to 2005, but its statewide deposit levels increased only 14 percent in the same period. The bank increased its deposits by $2.6 billion but added only one branch to a local footprint that's roughly two-thirds the size of Wachovia's.

Bank of America spokesman George Owen attributed much of the growth to the bank's retail operations, but noted growth could also be attributed to wholesale and commercial operations.

Wachovia's Jacksonville deposits, in contrast, increased by 32 percent to $7.4 billion from $5.6 billion in 2004 and more closely mirrored its statewide deposit increase of 35 percent. The bank also added 15 local branches through the acquisition of Birmingham, Ala.-based SouthTrust Bank, adding $860 million and 4.4 percent of SouthTrust's 2004 local market share to Wachovia for 2005.

Kelly Madden, North Florida regional president for Wachovia, said she finds the data useful when combined with other studies and surveys.

"It's a snapshot of where all of us were in the marketplace on June 30," she said. "It doesn't tell us where we were yesterday, today or tomorrow."

Owen said Bank of America isn't happy with how the data is reported because it doesn't show how active the company is in loans in the market area and what types of lending the bank does.

The market share data compiled annually by the FDIC comes from data supplied by banks. Jack Phelps, regional manager for the FDIC in Atlanta, said banks have some flexibility and discretion in how they report their data, particularly corporate and wholesale accounts.

If a company, for example, changes the location of an operations center without changing its bank, that money could follow the company to a new market and appear to be a deposit increase, even though the bank hasn't added any business.

Having a highly consolidated bank market, Phelps said, where a few large banks hold much of the market share, can also skew the figures.

The five largest banks in Jacksonville -- Bank of America, Wachovia, EverBank, SunTrust Bank and Compass Bank -- control nearly 83 percent of the market. Wachovia and Bank of America, both based in Charlotte, N.C., account for more than 80 percent of the deposit growth in Jacksonville from 2004 to 2005.

Phelps said changes at the largest banks in a region could warp the picture at the top of the market. A prime example, he said, comes from this year's data in Columbus, Ohio. That market grew 412 percent from 2004 to 2005 and J.P. Morgan Chase Bank now has 82 percent of the deposits after merging with Bank One. J.P. Morgan had no market share in 2004 and Bank One controlled about 25 percent.

Locally, Bank of America appears to have changed its reporting for various wholesale accounts, Phelps said. But Owen said Bank of America didn't change its methods of disclosure to the FDIC and how it collects its data, and has been consistent in that process for several years.

Meanwhile, Wachovia is still incorporating the inevitable changes in making a major market acquisition, Madden said. "The picture's a bit fuzzy with our SouthTrust integration. It's obscuring some of the real organic growth we've had in the market this year."

Madden places that organic growth figure at about 15 percent from 2004.

Bennett Brown, president of American Enterprise Bank of Florida, sees something much simpler motivating some of the reporting changes banks make in the deposit market share report: ego and pride.

"For the larger banks, it's certainly a measure of your performance in the marketplace, especially working at the larger regional and national banks," Brown said. "Community banks use them to show that we are growing, but it is a prestige issue at larger banks."

Brown's one-branch bank has a 0.33 percent share of the Jacksonville market on $83 million in market deposits, which ranked it 21st among the market's 37 banks.

Phelps said large regional and national banks often aren't shy about using the discretion in reporting deposits to become No. 1 in a prestigious market.

In Jacksonville, the lead in market share has bounced between Bank of America and Wachovia since Bank of America acquired Barnett Bank in 1998.

Bank of America has since been the largest bank in the market three of the last five years, most recently in 2003, with First Union, Wachovia's predecessor, and Wachovia occupying the top spot the other years, including in 2004.

The overall deposit level in the Jacksonville metro area of Baker, Clay, Duval, Nassau and St. Johns counties increased 28 percent, surpassing increases of 21 percent from 2002 to 2003, and 23 percent from 2001 to 2002. The statewide deposit level grew 7 percent in 2005, more than double the national average of 3 percent.

Phelps said he thinks true organic growth is represented by the figures for a market's smaller community banks, but it's difficult to discern a clear deposit level for the largest banks.

Among local community banks, Cygnet Private Bank had the largest year-to-year deposit increase, climbing 314 percent from $14 million in deposits and 0.07 percent market share in 2004 to $59 million in deposits and 0.24 percent market share this year. More established community banks grew at more modest levels.

Prosperity Bank, based in St. Augustine, increased its deposits by 5 percent from 2004 to 2005, to more than $346 million in local deposits. First Guaranty Banking & Trust, based in Riverside, surpassed $250 million in deposits as it grew 9 percent from 2004.

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.