BusinessTN

And the beat goes on. Yet again, the 2008 Federal Deposit Insurance Corp. snapshot of deposit balances in banks across Tennessee revealed what has been a general trend for the last several years--Tennessee's locally owned banks, for the most part, continued to gain market share, while their larger regional competitors either lost market share or made modest gains.

"I think, after several years in a row, that becomes a trend that is reliable," says Stan Puckett, chairman and CEO of Greeneville-based GreenBank.

Also of note, though, is the fact that Regions took the top spot in the state, ending First Tennessee's long reign as No. 1. Jim Schmitz, Middle Tennessee area executive for Regions, says that the institution's new position is due in part to the fact that First Tennessee's parent company, First Horizon National Corp., reduced its mortgage business.

"First Horizon had deposits that were housed in Memphis that went with their nationwide mortgage business. With the removal of those, we had a truer look at the deposits situation for the state of Tennessee," Schmitz says.

Still, Regions, along with First Tennessee and No. 4 Bank of America, saw a decrease in both deposits and market share. That, Schmitz says, has to do with the fact that the FDIC deposit numbers don't reflect Regions' total business, particularly its affiliation with investment firm Morgan Keegan.

"Depending upon economic circumstances and what's going on out there, we may advise some of our customers, instead of having their excess money in deposits, to have those housed in Morgan Keegan in some type of investments, whether it be equity or bonds or annuities," Schmitz says.

Indeed, each year, banking executives caution that the FDIC's deposit market share report--a one-day snapshot of deposit balances collected on June 30 and released each year in the fall--does not provide an institution's complete financial picture. Nonetheless, most agree it's useful for measuring market clout and serves as a decent indicator of what's going on in the banking world.

And those who continue to gain ground don't mind crowing about it. SunTrust, which maintained the No. 3 position, is among those that saw gains. The Georgia-based institution grew its deposits from $10.4 billion to $10.6 billion and its market share from 9.71% to 10.15%. Continuing its steady climb, Pinnacle Financial Partners, which stormed onto the Knoxville market in 2007, left its No. 8 slot behind and broke into the state's top five. Terry Turner, CEO and president of Pinnacle, partially attributes the institution's rise to the fact that it operates in Nashville and Knoxville, the "two best high-growth markets in the state."

"Our company has been engineered to take advantage of turmoil and poor service in large regional banks," Turner adds. "The markets that we serve, Nashville and Knoxville, are both dominated by three large regional banks, all of whom are losing market share."

Though the statewide numbers show that Pinnacle knocked BB&T to No. 6, the North Carolina-based bank grew its deposits from $2.3 billion to $2.5 billion and its market share from 2.15% to 2.41%. Puckett's GreenBank dropped from No. 6 to No. 7 in the state, but it, too, reported increases in deposits and market share.

And while Schmitz says that given the state of the economy and the banking industry, he has already seen some anecdotal evidence related to a "flight to safety" from smaller to larger banks from smaller banks, Turner says Pinnacle has developed meaningful deposit relationships with customers who are leaving regional banks due to "rumors relative to longevity and survivability." Perhaps next year's numbers will settle the score, but there are a few points on which bankers, big and small, seem to agree.

"You will definitely see far fewer startup banks in the foreseeable future," Puckett says. "And there will be some consolidation on all levels--probably at an advanced rate over what we've seen in the last few years--and that will be across the board in terms of sizes." In all, Tennessee's 234 banking institutions (two fewer than in 2007) recorded more than about $104.8 billion in deposits, down about $2.4 billion from 2007. The following breakdown highlights the changes in metropolitan statistical areas (MSAs) throughout the state.

Memphis

The number of deposits in the Memphis MSA decreased from $27.06 billion in 2007 to $21.4 billion in 2008. One more institution joined the MSA in 2008, bringing the total to 58. First Tennessee topped the list again in 2008, but the Memphis-based bank, which typically claims about half of the market, lost almost 15% deposit market share. Total First Tennessee deposits dropped to $7.8 billion from $13.6 billion in 2007. Though the top five are the same as last year's, the other four institutions on the list increased market share, with Atlanta-based SunTrust being the only institution that saw deposits increase.

Nashville

Banking deposits increased about $1.2 billion between June 30, 2007, and June 30, 2008, in the Nashville MSA, and like last year, there were 59 institutions in the market. The top five looked a bit different from last year, as Pinnacle jumped over First Tennessee to capture the No. 4 spot. In fact, Pinnacle was the only institution in the top five that gained market share and deposits. The Nashville-based bank grew its local deposits in Nashville by $333 million and increased its market share from 5.77% in 2007 to 9.56% in 2008.

Jackson

Regions claimed first place again in the Jackson MSA--growing deposits but decreasing in market share from 30.69% to 29.27%. While No. 2 BancorpSouth and No. 3 First Tennessee saw a decrease in deposits and lost market share, No. 4 Clayton Bank & Trust and No. 5 First Bank (which switched places between 2007 and 2008) saw an increase in both. First Citizens National Bank joined the Jackson MSA market, bringing the total to 15 institutions. Market deposits increased from more than $1.6 billion in 2007 to about $1.8 billion in 2008.

Clarksville

The number of deposits in the Clarksville MSA increased from about $2.78 billion in 2007 to about $2.8 billion in 2008. The area is home to 15 institutions--unchanged from last year. Top player F&M and No. 2 Planters Bank, which jumped from No. 4 in 2007, increased deposits and market share. Meanwhile, No. 3 BB&T (No. 2 in 2007), No. 4 Regions (No. 3 in 2007), and No. 5 U.S. Bank NA (unchanged) all lost deposits and market share.

Knoxville

Eight institutions joined the Knoxville MSA between June 30, 2007, and June 30, 2008, bringing the total to 43. The number of deposits jumped from $10.4 billion to $11.1 billion. Though the top four players mirror the 2007 list, the three frontrunners--First Tennessee, SunTrust and Regions--gained deposits and lost market share. Still, along with No. 4 Home Federal Bank of Tennessee, which gained deposits and market share, the four leading institutions hold more than 67% of the market. Other players of note include No. 5 BB&T, which grew its market share from 6.7% in 2007 to 7.7% in 2008, and Pinnacle, which grew its deposits by about $116 million and jumped 20 positions to No. 14.

Chattanooga

SunTrust maintained its position as the market leader in the Chattanooga MSA for the 11th year in a row. The frontrunner also grew deposits from about $1.5 billion in 2007 to about $1.7 billion in 2008 and market share from 21.01% to 22.72%. The top five looked the same as that in 2007, but No. 2 First Tennessee, No. 3 Regions and No. 4 Northwest Georgia Bank saw a decrease in deposits and market share. Cornerstone Community Bank, which maintained the No. 5 position, joined SunTrust in boosting deposits and market share. The Chattanooga MSA's 28 institutions recorded more than $7.6 billion in total deposits (up about $3 million from 2007).

Tri-Cities

The Kingsport-Bristol MSA recorded almost $4.4 billion in deposits, up from almost $4.3 billion in 2007. Wachovia and First Tennessee switched places in 2008, but other than that, the top five mirrored the 2007 list. The Johnson City MSA was home to 21 banks this year, one more than last year, and together, they recorded deposits of almost $2.9 billion, up from almost $2.8 billion last year. The big story in this market was Mountain Commerce Bank, which jumped from the No. 9 spot in 2007 to No. 4 in 2008 and saw market share increase from 5.42% to 8.53%. The Tennessee-based bank's jump came as State of Franklin SB plummeted from the No. 4 spot to the 10th, but the No. 1, No. 2, No. 3 and No. 5 institutions maintained their spots.