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Posted on Thu, Oct 22, 2009 : 6:49 a.m.

Annual FDIC report: Ann Arbor's local banks gaining market share

By Paula Gardner

A new report on local banking shows that the collective market share of locally run institutions climbed nearly two percentage points since 2008.

Local banks now account for 23.96 percent of deposits in the Ann Arbor region, up from 22.07 percent at the same time in 2008.

That’s according to the most recent Federal Deposit Insurance Corporation data, released Oct. 16.

The area’s community bankers agree that they’re all a part of a national trend.

“Around the country, community banks are up,” said Richard Dorner, who was president of Ann Arbor Commerce Bank when it merged into Michigan Commerce Bank earlier this year.

The collective deposits that comprise the local banks’ market share total $1.449 billion - up 43 percent, or $440 million from 2008.

The overall deposit total from the 19 banks operating a combined 104 branches in the market - a number unchanged from 2008 - is $6.048 billion, up 6.6 percent from $5.671 billion.

“New money is coming into the market,” said Todd Clark, president of United Bank & Trust Washtenaw. “… Obviously cash is king right now. You’re seeing a lot of people build their cash reserves. That’s probably the biggest reason for the (dollar volume growth).”

Still, the annual report leaves many unanswered questions for local lenders who are interpreting the data in light of the banking industry implosion that started in 2008. The fallout from that collapse continues, with more federal programs to shore up institutions that are struggling with bad debt, liquidity and other issues.

Among the year-over-year fluctuations, local banker said, is the growth in certificates of deposit, which the government now insure up to $250,000 as part of the banking bailout package, and the CDARS program, in which customers can make large deposits with a single bank that will place the money into a network of CD's at other banks, staying below the FDIC insurance minimum for each.

“It’s really hard over one year to draw too many good conclusions because there are so many fluctuations,” said Tim Marshall, president of the Bank of Ann Arbor.

At the same time, many local bankers agree that they’re benefiting from national scrutiny of banks and the level of distrust that’s grown among the public as the number of failing banks climb across the United States.

That’s pushing clients to consider local banks, many of which launched marketing campaigns to underscore how they use local deposits to benefit local clients and businesses.

“Most of our deposit growth is from regional and national banks,” said Peter Schork, president of Ann Arbor State Bank.

In the local banking market, the top five banks ranked by market share were unchanged in the 2009 report. They are, in order, TCF, National City, Keybank, JP Morgan Chase, Comerica.

How the local banks fared:

• Bank of Ann Arbor remains the largest local bank, ranking at No. 6 with 7.04 percent market share. That percentage fell from 7.33 percent in 2008, but dollar volume grew to over $426 million in deposits.

• Michigan Commerce Bank was No. 7 with 5.69 percent market share, up from 5.22 percent from its 2008 report under the Ann Arbor Commerce Bank name.

• UBT Washtenaw moved into 8th place, posting a 5.2 percent market share, up from 4.73 percent in 2008.

• Chelsea State Bank was No.12 in 2009, with a 3.22 percent market share, up from 2.97 percent.

• University Bank climbed to No. 13 in 2009, with a 2.25 percent market share, up from 1.82 percent.

• Ann Arbor State Bank, which opened in late 2008, posted 0.56 percent market share, representing deposits of $33.6 million.

Stephen Lange Ranzini, president of University Bank, said more market share movement likely will be realized by the time the 2010 report is released, as national and regional banks exit the market and shed local loans.

“As national …. banks have withdrawn from the market … we’re finding very high demand for people wanting to reestablish banking relationships,” he said.

Some movement is likely as local municipalities shift their deposits to local accounts, something that UBT’s Clark said has already impacted the market.

But there are limits to how much movement can happen in the local market, Schork said, as long as the mix of locals, regionals and nationals remains.

“The big banks will still have larger market share because they control the larger corporate customers,” Schork said.