When a bank is sold, rivals inevitably see the ensuing tumult as an opportunity to hunt for disgruntled customers.
An uptick in deal activity the past few years has created plenty of such feeding frenzies. New owners have taken control of branches that account for more than 20% of total deposits in about 50 markets around the country since the middle of 2011. In another 100 markets, branch asset turnover has exceeded 10%. (See the following graphic. Interactive controls are described in the captions. Text continues below.)
Upstate New York cities like the Rochester and Syracuse rank among the most active for deals. Customer defections following a four-way split of HSBC’s old branch network in the region had temporarily turbo-charged a formerly slow-growth segment of M&T’s (MTB) business, Chief Executive Robert Wilmers wrote in a shareholder letter this month.
Elsewhere in the region, First Niagara’s (FNFG) John Koelmel, the man who led the purchase of the biggest chunk of HSBC’s network, lost his chief executive job after a multiyear buying spree disappointed investors.
Branches holding one-fifth of deposits in the Syracuse market have a different owner now than they did on June 30, 2011.
In Rochester, the figure is 15%. In addition to First Niagara, buyers in the two metropolitan markets include KeyCorp (KEY), Community Bank System (CBU) and Financial Institutions Inc. (FISI); each bought parts of HSBC’s former portfolio from First Niagara. M&T has the largest share of deposits each market: 23.3% in Syracuse and 24% in Rochester.
(The markets used here are metropolitan statistical areas, economically integrated regions defined by the government with urban cores that have populations of at least 50,000, and micropolitan statistical areas, with core populations between 10,000 and 50,000. Turnover figures include branches subject to acquisition agreements that have not yet been completed.)
Among the roughly 80 markets across the country with more than $10 billion of deposits, Syracuse ranks second only to the Raleigh-Cary area in North Carolina in terms of turnover.
PNC Financial’s (PNC) acquisition of RBC Bank, including its headquarters branch in Raleigh, accounts for most of the deposits that moved to different banks there.
In the end, deals are a good-news, bad-news story for many incumbents. On the upside is the chance to woo customers. A big negative can invovle the entry of a tough, new competitor into the market.
M&T is itself a pending acquirer as a result of its agreement to buy Hudson City Bancorp (HCBK). The deal appears likely to make smaller waves in the markets involved than HSBC’s exit generated in upstate New York. Hudson City’s largest market share is in the Bridgeport-Stamford-Norwalk area of Connecticut, where it holds 3.8% of deposits.