When Keith Sanford joined First Tennessee Bank as a management trainee 31 years ago, the young college grad was among nearly 500 employees for the bank in Chattanooga.
Since then, First Tennessee has quadrupled its deposits but cut its staff in half. The 52-year-old banker said technology has trimmed office operations. But as the new market president in Chattanooga, Sanford wants to keep the bank's front-line staff and the bank's 28 offices in Hamilton, Bradley and Catoosa counties.
With more than $2 billion in deposits in the region, First Tennessee edged ahead of SunTrust Bank in 2010 to become the biggest bank as measured in local deposits.
Through the financial upheaval since the 2008 mortgage meltdown, however, the parent company of First Tennessee - First Horizon Corp. - sold both its nationwide mortgage division and its insurance company this spring.
"We're a smaller company, but we're back to our core business in banking in Tennessee and adjacent markets," Sanford said.
Sanford, who this month succeeded Frank Schriner who is retiring after 17 years as head of the Chattanooga First Tennessee Bank, talked with business editor Dave Flessner about the outlook for First Tennessee and the banking industry.
Q: What is your assessment of the banking market in Chattanooga?
A: I think it's the best place to be in Tennessee. Chattanooga is a vibrant community and it's a whole lot easier to bank in a growing community than in a stagnant or declining one. We obviously had some problems through the recession as a community and our bank had some bad loans and some properties we had to foreclose on. But I think Chattanooga is coming out of that downward cycle and is back on a growth spurt.
Q: How is loan demand?
A: We did see a decline in activity in the previous couple of years because of the slowdown in economic activity. But in the past 12 months, we've actually had an uptick and we're growing a little bit. The one thing that banks found out in recent years is that we make money the old-fashioned way, which is getting fees and revenues from loans. If you don't make loans, you don't make much money.
Q: The Dodd-Frank Wall Street Reform and Consumer Protection Act is cutting what issuers like First Tennessee may charge retailers for debit card services to 21 cents per transaction, plus 0.05 percent of the transaction's amount. That is less than half of what was previously charged. What impact is that having on other bank fees?
A: We are having to raise some of our fees and make fewer offers for free checking and other services. Basically, debit card transactions and other fees allowed us in the past to provide free checking, which was really a loss leader for our bank.
But there are still ways not to pay a fee if you have a direct deposit to your account and get a electronic statement you can still qualify to waive any service charge.
Q: With the growth of electronic banking, do you foresee cutting the number of bank branches First Tennessee operates?
A: We're going to try to continue to operate all of our branches and expand where there is growth because we want to keep our customers happy. Teller transactions are dropping about 2 percent a year, but people still use tellers, and one of the biggest reasons people open an account at a bank is convenience, location and hours. So we try to be as convenient as we can.
We actually operate a bigger bank (in deposits) with fewer branches in Chattanooga than either Regions or SunTrust. We're a little more efficient, but we operate more hours. One of the things we have done is to use more part-time workers, which fits the needs of a lot of college students, mothers and others who only want to work part of the week. Roughly a quarter of our tellers and about 20 percent of our customer service representatives are part time so we can cover our 60 hours a week of banking operations.
Q: First Tennessee is not a national bank but it is also is bigger than a community bank. What is your niche in the Chattanooga market?
A: We're Tennessee's bank. We operate here in Tennessee for Tennesseans. We're big enough to bring the products, services and expertise that consumers of most any size may need, but we're small enough to have that hometown feel. We pride ourselves on community service.
We want to grow where the demographics lead us so eventually we expect to go more into North Georgia. It's still close enough that our name is well known.
We're concentrating in banking, which is what we think we're good at. But as our old tag line used to say, "All things financial." We offer wealth management, lending, deposits and retirement planning to meet whatever is our customers' financial need.