The sign painters for Chattanooga's banks should stay busy in 2020 as the local banking landscape continues to get new names and players, including the first new startup bank in Chattanooga in 13 years.
Despite lower interest rates, bank deposits in metropolitan Chattanooga last year grew by a healthy 4.5% from the previous year to top $10 billion for the first time. Local bankers say they are eager to grow even more to keep pace with rising loan demand as Chattanooga's economy continues to outperform the nation.
"The industry is very strong right now, even with some tighter margins due to lower interest rates, and banks in general are trying to get more deposits to help sustain the strong loan demand we're seeing," says Colin Barrett, president and CEO of the Tennessee Bankers Association.
Even with 28 commercial banks in the six-county Chattanooga metropolitan area, a group of veteran bankers plans to raise at least $30 million to start another Chattanooga bank. The name of the business — RockPoint Bank — is based on the Native American meaning of Chattanooga: rock coming to a point.
"If you look at the small- to medium-size business market that we're going to serve, we think there is a void in the market in having a bank that is headquartered here with local management, decision-makers and ownership," says Hamp Johnson, the president and CEO of the organizing group behind RockPoint Bank.
Johnson, formerly market executive for JP Morgan Chase & Co. for the past five years and a former manager at First Tennessee Bank, says interest has been strong in the new bank, which is to open this summer.
"When folks ask, 'How many banks does Chattanooga need?' our response is, 'I don't know the total number, but I know there is a need for what we are going to offer,' " Johnson says.
Biggest banks in metro Chattanooga
As of June 30, 2019, 28 commercial banks collectively shared nearly $10.2 billion in deposits. The banks with the most deposits in the 6-county Chattanooga metro area were:
1. First Horizon, $2.3 billion in assets and 18 offices
2. SunTrust (soon to become Truist), $1.7 billion and 21 offices
3. Regions, $1.3 billion and 19 offices
4. Pinnacle, $852.8 million and two offices
5. FirstBank, $611.5 million and nine offices
6. Bank of America, $569.8 million and four offices
7. First Volunteer, $447.2 million and 11 offices
8. Citizens Tri-County, $378.2 million and 10 offices
9. SmartBank, $344.5 million and five offices
10. Bank of LaFayette, $235.5 million and three offices
Source: Federal Deposit Insurance Corp., Deposit Market Share data for metropolitan Chattanooga, June 30, 2019.
Regional banks expand into Chattanooga
As RockPoint Bank prepares to open a downtown office later this year, another bank from Scottsboro, Alabama — FNB — is preparing space at Broad and 11th streets for its first Hamilton County bank branch. FNB, which started more than a century ago as the "friendly neighborhood bank," bought the former Capital Bank in Fort Oglethorpe, Chickamauga and Ringgold, Georgia, in 2018 and is adding a Chattanooga office to its local market presence.
FNB is the second Alabama bank to expand into Chattanooga in as many years. First US Bank, headquartered in Birmingham, opened a loan production office last summer at Cambridge Square in Ooltewah and plans to add a mortgage office and eventually a full-service bank in Hamilton County.
James House, CEO of the bank's holding company First US Bancshares Inc., says "Chattanooga is a key area in East Tennessee with significant growth potential" and is a natural extension of First US Bank's expansion into Knoxville with its purchase of Peoples Bank in 2018.
Also last year, SouthEast Bank, based in Farragut, Tennessee, opened an office in the Liberty Tower downtown headed by Ron Jones, a former commercial loan officer at First Volunteer Bank who became city president for SouthEast Bank. The bank already had a branch in Ooltewah and more than $90 million in bank deposits in metro Chattanooga.
Other regional banks also have branched into Hamilton County in the past three years, including First Citizens Bank National Band of Dyersburg, Tennessee, which has added branches near Hamilton Place and Northgate malls, and BancorpSouth of Tupelo, Mississippi, which opened a downtown office in Chattanooga in 2018.
Chattanooga’s biggest credit unions
1. Tennessee Valley Federal Credit Union, started in 1936, has grown to nearly $1.6 billion in assets and 149,000 members
2. Comtrust Federal Credit Union, started in 1935, has more than $352 million in assets and more than 24,000 members
3. Chattanooga Area Schools Federal Credit Union, started in 1935, has $151.5 million in assets and more than 11,000 members
4. Trust Federal Credit Union, started in 1991, has assets of $88.5 million and more than 10,000 members
5. Chattanooga Federal Employees Credit Union, established in 1925 as the state’s oldest credit union, has $48.9 million in asset and more than 3, 000 members
Source: Tennessee Credit Union directory
New names for biggest banks
While new banks enter the market, Chattanooga's two biggest banks are taking on new names.
Chattanooga's biggest bank, formerly known as First Tennessee bank since it entered the market more than three decades ago, was renamed First Horizon in October. The new name comes as First Horizon, the biggest bank in Tennessee, is preparing to merge with Iberiabank Corp., the biggest bank in Louisiana, in an all-stock deal valued at $31.7 billion.
"We have a merger of equals, two similarly sized organizations," First Horizon CEO Bryan Jordan says, noting that the combined bank will operate in 11 states so the First Tennessee brand no longer reflected the company's footprint. "We'll have the ability to invest more in customer relationships, do larger loans and larger transactions with our customer base."
An even bigger merger — the biggest since the Great Recession — was completed in December when SunTrust and BB&T combined into a new company called Truist Financial and instantly became the sixth-largest bank in the country.
Based in Charlotte, North Carolina, Truist has about $442 billion in assets under management. Truist will operate 147 branches in East Tennessee, including 21 former SunTrust and four BB&T locations in the metro Chattanooga market.
The transition to the Truist brand will take about two years to complete and is expected to result in an overall expense reduction of $1.6 billion by 2022, according to company officials. In the meantime, customers of both BB&T and SunTrust will be served through their respective bank branches using the same apps, websites and services as before the merger closed.
To gain regulatory approval of the merger last year, SunTrust sold off 30 branches in North Carolina, Virginia and Georgia to First Horizon Bank.
"With the amount of branch overlap in our footprint (between SunTrust and BB&T offices) we'll have the opportunity to consolidate some branches with little or no disruption to our clients," says Christian Corts, the Truist regional president for East Tennessee. "We've not determined which branches will be affected. However, our commitment to be involved in our local communities is unwavering and our branches will play a key role in that service."
Banks and credit unions
Banks and credit unions serve similar financial roles for consumers, although banks provide more commercial and corporate services than credit unions. Both banks and credit unions hold deposits and make investments to raise money to lend to businesses and individuals.
Most banks are for-profit businesses owned by shareholders. Credit unions are nonprofit entities owned by members.
In Tennessee, there are 176 banks, including 136 headquartered in Tennessee, with combined bank deposits of more than $160 billion. There are 139 credit unions in the Volunteer State with a total of 2.3 million members and $26.6 billion in assets.
Pruning bank branches
As banks consolidate and more financial services are available online, banks are reducing the number of brick-and-mortar offices they operate even with more deposits and loans on their balance sheets. In the six-county Chattanooga area, the number of bank branches dropped last year to 145 even with the additions to the market.
That was down 34 branches from the peak reached in 2009 when the Chattanooga area had 179 bank branches, according to FDIC data. The number of bank offices is now at the lowest number in Chattanooga in 23 years and is likely to drop further as more banks consolidate and adopt new technologies to serve customers online or with mobile facilities.
"We'll continue to upgrade and improve our technology to serve the financial needs of our customers in the best manner possible," Corts says.
Like most industries, banks are increasingly able to deliver services and products online or with technologies and staff outside of brick-and-mortar branches, Barrett says.
New names, players in Chattanooga banking market
SunTrust, BB&T merge in $66 billion deal to create Truist, the sixth biggest bank in the U.S.