FDIC: Washtenaw County's community banks continue to gain market share

The trend comes as the total amount on deposit in Washtenaw County fell by $19 million to a total of $6.029 billion, according to the Federal Deposit Insurance Corp.

It also comes as the U.S. tries to recover from a banking crisis that’s hurt the reputation of many larger banks as institutions of all sizes face challenges and scrutiny of their balance sheets.

Gains in the local market share were shown by:

• JPMorgan Chase Bank, moving into 3rd place with 12.04 percnt of the market share among its 12 offices. • Michigan Commerce Bank, moving into number 6 with 8.09 percent of the market at its single office, up from 5.69 percent. • Bank of Ann Arbor, now in 7th place with 7.92 percent and 6 area offices, up from 7.04 percent. • United Bank & Trust, climbing to 5.37 percent of the market among its 5 offices, up from 5.2 percent. • Chelsea State Bank, with 3.26 percent of the market and 3 locations, up from 3.22 percent. • Ann Arbor State Bank, a 2008 startup that grew to 1.24 percent from 0.56 percent. • And Dearborn-based Fidelity Bank, which closed its West Stadium branch in summer 2009. The bank has 0.95 percent of the local market share, up from 0.81 percent.

Meanwhile, University Bank held steady at 2.25 percent market share.

The data, based on filings as of June 30, was just released by the FDIC.

Big banks “no longer need localized deposits,” said Peter Schork, president and COO of Ann Arbor State Bank.

That’s because inter-bank borrowing -when a large bank borrows from a community bank - gives the large banks enough access to cash for loans, in addition to the large-scale deposits the banks hold nationally.

On a local basis, the smaller banks rely on local deposits to generate the local loans, Schork said, keeping their need to drive new deposits high.

“Big banks don’t really want small depositors,” Schork said.

Banks losing market share in Washtenaw County include:

• Market leader TCF Bank, which dropped from 14.58 market share to 13.24 percent. • PNC Bank, which acquired National City and now has about 12.04 percent of deposits, a drop fro 12.69 percent. • Keybank, which fell from 11.99 in 2008 to 10.63 by 2010. • Comerica, which dropped to 8.82 percent from 9.26 percent.

Michigan Commerce Bank’s growth is likely related to changes within the bank, said CEO John Smythe, involving accounts that were formerly held at affiliated being transferred internally.

The former Ann Arbor Commerce Bank holds the charter for the 10-bank network. The bank has been operating under the oversight of state and federal regulators since spring after a consent order sought to restore “all aspects of the bank to a safe and sound condition.”

Growth in local banks also is reflected in growth in their mortgage businesses in addition to deposit share, Schork said.

“All of the local banks have increased or enhanced their retail mortgage presence,” he said.

While fewer homes are being sold, one reason for the increase is the drop in mortgage brokers due to changing regulation; another is the quality of the residential loans now being written, also due to increased scrutiny.

“The pie is smaller, but we’re all getting a bigger piece of it,” Schork said.

Local banks also are adding employees and seeing expansion opportunities. One example is the Bank of Ann Arbor, which acquired a bank in Plymouth in 2010.

The increase in market share “confirms our strategy that local, community banks serve a big role in our future economy,” said Hans Meier, senior vice president.

Paula Gardner is Business News Director of AnnArbor.com. Contact her at 734-623-2586 or by email. Sign up for the weekly Business Review newsletter, distributed every Thursday, here.