Growing deposits is critical to a bank’s financial health, and gaining a greater share of available deposits in a market goes hand in hand with that.
Four Alabama-based banks have seen a significant increase in their share of Alabama deposits during the past five years: Cadence Bank (110 percent), ServisFirst Bank (61 percent), BBVA Compass (33 percent) and Bryant Bank (15 percent), according to the FDIC. Among those fastest growing banks, BBVA Compass has the greatest percentage share of total deposits in Alabama, at 15.1 percent, and Bryant the smallest, at 1.2 percent.
Each of the top banks has a unique history, vision and set of strategies to lure depositors, but executives at all the banks agree that excellent customer service sets them apart and is key to their deposit share growth.
Cadence Bank, headquartered in Birmingham, is a relatively new regional bank with a name that’s more than 100 years old. It was created in 2009 from a pool of distressed banks, including the former Starkville, Mississippi-based Cadence Bank; Houston, Texas-based Encore Bank, and Birmingham-based Superior Bank.
Like a phoenix rising from the ashes, Cadence has seen the greatest deposit share growth among Alabama’s top four, with its 110 percent increase during the past five years. The bank’s growth through September 2012 came from bank acquisitions, but since then Cadence has significantly increased its deposits organically.
Cadence chose not to comment on its growth in market share.
ServisFirst Bank, founded in 2005 in Birmingham, has the distinction of having initially raised $35 million in local capital, the most local capital raised by a startup bank in the state of Alabama, according to the bank’s website. Over the years, ServisFirst has expanded organically across Alabama and into Florida, Tennessee and South Carolina. The purchase of Metro Bancshares Inc. in 2015 expanded ServisFirst’s reach into Atlanta. As of June 30, 2016, the bank had more than $5.6 billion in assets. During the past five years, the bank has grown its Alabama deposit share by 61 percent.
Like Cadence, ServisFirst has specifically sought out commercial business, which plays heavily in its customer base, says Tom Broughton, chief executive officer and president of ServisFirst Bank of Birmingham. The company’s proactive bankers, rather than advertising, bring in new business. Word of mouth is another strong business generator. “I’d estimate that 80 percent of our business comes from referrals, ” Broughton says.
Broughton believes the 2008 financial crisis boosted ServisFirst’s growth. “There’s been a flight to quality, ” he says. “We serve our customers well, are reliable and have a high quality balance sheet.”
In fact, ServisFirst was the most profitable of all Alabama banks by return on assets for the 12 months ending Dec. 31, 2015, according to the FDIC. With a return of 1.43 percent, ServisFirst outperformed Bryant, also a state leader at 1.19 percent; Cadence at 0.60, and Compass, 0.58. “We keep our overhead costs low, ” Broughton says. “We don’t have an excess number of branches. Our customers appreciate our technology tools and the availability of our bankers.”
Because of its relatively late entry into the banking scene, ServisFirst doesn’t have to contend with an excess number of legacy branches as do some larger and longer established banks, Broughton points out. Advances in technology, such as remote deposit, have lessened the need for a large number of branches.
Outsourcing behind-the-scenes administrative functions also helps trim costs. “Many of the retail banks you see on every corner make their profits only through their overdraft fees on personal accounts, ” Broughton says. “We have a completely different business model.”
Ranked among the nation’s top 25 largest commercial banks based on deposit market share, Birmingham-based BBVA Compass grew its share of Alabama deposits significantly (33 percent) during the past five years.
The bank, which was acquired by Spain’s Banco Bilbao Vizcaya Argentaria (BBVA) in 2007, now operates 688 branches in Alabama, Arizona, California, Colorado, Florida, New Mexico and Texas. According to the 2016 BBVA Compass 3rd quarter financial report, the BBVA subsidiary has $91.9 billion in assets, $61.9 billion in loans and $68 billion in deposits.
Like other large banks, BBVA Compass deposits are heavily weighted to personal accounts, says Ed Bilek, executive vice president and head of BBVA Compass Investor Relations. “The majority of the bank’s deposits come from our consumer-focused business, followed by the commercial side of the bank, ” he says. “Our corporate, investment banking and treasury units also aid our deposit-gathering capabilities.”
Even though BBVA Compass has an abundance of branches to serve customer needs, the bank still seeks to provide customers with the latest technological tools, Bilek says. “Technology is changing customer behavior, so it’s very important to our strategies, ” he says. “New technologies allow us to bring more value to clients at lower cost, help us improve customer service and the client experience and allow us to meet our customers’ changing needs.”
Although BBVA Compass, like the other top four banks, would not reveal its marketing budget or even what percent of operating costs it represents, Bilek did say the bank invests in a broad range of marketing strategies to help boost deposit share. “We’ve seen positive results by running multi-channel efforts between print and local media, as well as digital media, using our branches as a focal point for branded awareness in our markets, ” he says.
Bryant Bank, based in Tuscaloosa, has come a long way since 2005 when it was founded and primarily capitalized by one man. That man was Paul W. Bryant Jr., son of legendary University of Alabama football coach Paul “Bear” Bryant. At the time of the new bank’s opening the younger Bryant, a shrewd businessman who built a fortune from greyhound racing and other ventures, expressed his vision for a community-oriented bank.
That vision hasn’t changed as the bank has expanded to 14 branches across the state, says Bryant Bank President Claude Edwards. “Our customers trust us because they know who we are, ” he says. “We are part of the community.”
The bank has expanded thoughtfully and carefully to meet customers’ needs, but Edwards says there is no plan to open numerous branches. “Technology allows us to offer our customers greater convenience, ” he says. “There’s less and less need for brick-and-mortar structures that are expensive to build and operate.”
Lower overhead allows Bryant to keep its cost down, resulting in higher profitability, Edwards says. Of the top four Alabama banks with the greatest deposit share growth, Bryant is No. 2 in its percentage of return on assets. Its return for the 12 months ending Dec. 31, 2015 was 1.19 percent, according to the FDIC.
The bank does not operate with a large advertising budget, Edwards says, relying instead on its relationships in the community, good word of mouth from customers and direct link to the Bryant family. Founder Bryant serves as the bank’s chairman as well as president of Greene Group Inc., a privately held holding company. Bryant also serves on the Board of Trustees of the University of Alabama and has donated millions of dollars to the Alabama Crimson Tide football program.
In homage to Bryant’s father, the bank offers a prepaid gift card, the Houndstooth Card, with a houndstooth background and an image of Bear Bryant’s iconic houndstooth hat.
Kathy Hagood and Cary Norton are freelance contributors to Business Alabama. Hagood is based in Homewood and Norton in Birmingham.
Text By KATHY HAGOOD // photo by cary norton