Evansville, Ind., is proving to be a tough market for outsiders.

First Indiana Corp., an Indianapolis-based thrift company, said last week that it is leaving Evansville and selling its five branches there to local CNB Bancshares. First Indiana said it had failed to build a significant presence in a market where five local banks-CNB, Old National Bancorp, National City Bancshares, Permanent Bancorp, and Fidelity Federal Bancorp-control 93% of the deposits.

"Those local institutions do a good job down there," said Robert H. McKinney, chairman of $1.8 billion-asset First Indiana.

Mr. McKinney said his company tried unsuccessfully to buy three Evansville banking companies. First Indiana, which entered Evansville in 1989, will now concentrate on markets in the central part of the state, he said.

Evansville, in Vanderburgh County, is in the southwest corner of Indiana, a three-and-a-half-hour drive from Indianapolis.

Evansville's banks are hard to beat in their home market, said Daniel Cardenas, a bank analyst at Howe Barnes Investments in Chicago. "Unless you have something spectacular, you're not going to be successful."

In pulling out, First Indiana was following in the footsteps of NBD Bank, now a subsidiary of Chicago's Bank One Corp. A year ago NBD said it was leaving Evansville because it could not compete. It sold its four branches, with $96 million of deposits, to Permanent Bancorp, a thrift with $285 million of assets.

James J. Giancola, chief executive officer of CNB Bancshares, said the Evansville banks are united in fending off the competition. "This is our home base, and we defend it with vigor," he said.

But the banks compete fiercely with each other. CNB, with $7.1 billion of assets, beat out several other bidders to buy First Indiana's $130 million in deposits. The terms of the sale were not disclosed.

The acquisition, which is expected to close in the third quarter, would move CNB into the No. 1 market position, with 36% of the deposits. Old National, the current leader, holds 35%.

Being on top in the market is important to Mr. Giancola, who was in talks to buy the No. 3 player, National City, earlier this year. Those talks ended after CNB learned that regulators would require it to divest much of its Evansville deposit total to satisfy antitrust concerns.

"Market share matters, and this is a pretty concentrated market," he said.

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