ABA Banking Journal - February 2008 - (Page 38) RETAIL BANKING money hunt I n recent years, core deposit gathering has been extremely competitive, especially so for community banks, which can’t necessarily resort to tactics like acquisition in order to grow. The fine art of making the balance sheet work won’t get any easier, either. Threat of recession and the consumer-hailing habits of large and foreign-owned banks will make finding cheap and stable funding ever more a game for the stalwart and innovative. On the Pulling in deposits: in competitive times, value proposition and execution counts Deposit growth— checking accounts, savings, money market funds, and CDs—has averaged from 5% to 6% in most markets annually since 2000 with a few dramatic blips up and down along the way, says Gordon J. Goetzmann, managing vice-president, First Manhattan Consulting Group, New York. On average, the typical mid-sized bank relies on wholesale funding for 10% of its balance sheet assets. By Lauren Bielski, senior editor Growth of core deposits is generally tied to rate of inflation, net new formation of households, and net business growth, Goetzmann points out, making for regional variation. Not all community banks are losers in their efforts to reach out to consumers and small businesses, as indicated in following regional scan: • Bank deposits in Atlanta, spurred by population growth, flowed mostly into de novo and community banks in 2005, although a recent article in the Atlantic Business Chronicle pointed out that banks of all sizes were stepping up efforts to attract funds between 2006 and 2007. • In Massachusetts, as reported in the Boston Globe in October 2007, Bank of America’s market share fell from 19.3% to 18.2%, and Citizens Bank of Massachusetts and Sovereign Bank also experienced market share declines as consumers looked for a more personal touch. • In Michigan, deposits grew just 1.3% in the year between June of 2006 and 2007 as reported in Business Review of Western Michigan. In that state, regional bank Huntington Bancshares, with 46 offices in 12 counties, was the second performer regionally, with $1.93 billion in deposits as compared to market share leader Fifth Third, which held $6.34 billion in deposits but has, at 117 offices, a much larger physical network. Still, Anat Bird, formerly with Wells Fargo and founder of SCB Forums, San Francisco, thinks that regional and community banks fail to get a fair share. And yet attracting deposits will be a necessary activity, says Bird, who notes that commercial and industrial lending is still outpacing deposit growth in most 38 FEBRUARY 2008/ABA BANKING JOURNAL www.ababj.com/subscribe.html ILLUSTRATION BY JAMES ENDICOTT/IMAGES.COM Table of Contents for the Digital Edition of ABA Banking Journal - February 2008 ABA Banking Journal - February 2008 Contents On ABABJ.COM: Have You Visited Our Brand-New Website? Editor's Column "That's Edutainment" Snapshot: Tier 1 Ratios Stable so Far 100th Anniversary: Then and Now ABA Resources ABA Chairman's Position Don't Despair Pass the Aspirin Cover Story: Socially Responsible Banking Profitably - Incoming America's Community Bankers Council Chairwoman, Dorothy Bridges Demonstrates the Way A True "Rags-to-Banker" Story Retail Banking: On the Money Hunt Community Bank Management: The Ugly Truth About Board Relations Does Core Really Matter? Security 2.0: Not Just a New Kettle of Phish A Personal Case of Mal-Serendipity DOD Credit Regs Demand Attention Mailbox Banker's Mart To Advertise/Index of Advertisers The Economy ABA Banking Journal - February 2008 ABA Banking Journal - February 2008 - ABA Banking Journal - February 2008 (Page Cover1) ABA Banking Journal - February 2008 - ABA Banking Journal - February 2008 (Page Cover2) ABA Banking Journal - February 2008 - ABA Banking Journal - February 2008 (Page 1) ABA Banking Journal - February 2008 - ABA Banking Journal - February 2008 (Page 2) ABA Banking Journal - February 2008 - Contents (Page 3) ABA Banking Journal - February 2008 - Editor's Column (Page 4) ABA Banking Journal - February 2008 - Editor's Column (Page 5) ABA Banking Journal - February 2008 - Editor's Column (Page 6) ABA Banking Journal - February 2008 - "That's Edutainment" (Page 7) ABA Banking Journal - February 2008 - 100th Anniversary: Then and Now (Page 8) ABA Banking Journal - February 2008 - 100th Anniversary: Then and Now (Page 9) ABA Banking Journal - February 2008 - 100th Anniversary: Then and Now (Page 10) ABA Banking Journal - February 2008 - 100th Anniversary: Then and Now (Page 11) ABA Banking Journal - February 2008 - 100th Anniversary: Then and Now (Page 12) ABA Banking Journal - February 2008 - ABA Resources (Page 13) ABA Banking Journal - February 2008 - ABA Chairman's Position (Page 14) ABA Banking Journal - February 2008 - ABA Chairman's Position (Page 15) ABA Banking Journal - February 2008 - Don't Despair (Page 16) ABA Banking Journal - February 2008 - Don't Despair (Page 17) ABA Banking Journal - February 2008 - Pass the Aspirin (Page 18) ABA Banking Journal - February 2008 - Pass the Aspirin (Page 19) ABA Banking Journal - February 2008 - Pass the Aspirin (Page 20) ABA Banking Journal - February 2008 - Pass the Aspirin (Page 21) ABA Banking Journal - February 2008 - Pass the Aspirin (Page 22) ABA Banking Journal - February 2008 - Pass the Aspirin (Page 23) ABA Banking Journal - February 2008 - Pass the Aspirin (Page 24) ABA Banking Journal - February 2008 - Pass the Aspirin (Page 25) ABA Banking Journal - February 2008 - Pass the Aspirin (Page 26) ABA Banking Journal - February 2008 - Pass the Aspirin (Page 27) ABA Banking Journal - February 2008 - Cover Story: Socially Responsible Banking Profitably - Incoming America's Community Bankers Council Chairwoman, Dorothy Bridges Demonstrates the Way (Page 28) ABA Banking Journal - February 2008 - Cover Story: Socially Responsible Banking Profitably - Incoming America's Community Bankers Council Chairwoman, Dorothy Bridges Demonstrates the Way (Page 29) ABA Banking Journal - February 2008 - Cover Story: Socially Responsible Banking Profitably - Incoming America's Community Bankers Council Chairwoman, Dorothy Bridges Demonstrates the Way (Page 30) ABA Banking Journal - February 2008 - A True "Rags-to-Banker" Story (Page 31) ABA Banking Journal - February 2008 - A True "Rags-to-Banker" Story (Page 32) ABA Banking Journal - February 2008 - A True "Rags-to-Banker" Story (Page 33) ABA Banking Journal - February 2008 - A True "Rags-to-Banker" Story (Page 34) ABA Banking Journal - February 2008 - A True "Rags-to-Banker" Story (Page 35) ABA Banking Journal - February 2008 - A True "Rags-to-Banker" Story (Page 36) ABA Banking Journal - February 2008 - A True "Rags-to-Banker" Story (Page 37) ABA Banking Journal - February 2008 - Retail Banking: On the Money Hunt (Page 38) ABA Banking Journal - February 2008 - Retail Banking: On the Money Hunt (Page 39) ABA Banking Journal - February 2008 - Retail Banking: On the Money Hunt (Page 40) ABA Banking Journal - February 2008 - Retail Banking: On the Money Hunt (Page 41) ABA Banking Journal - February 2008 - Retail Banking: On the Money Hunt (Page 42) ABA Banking Journal - February 2008 - Retail Banking: On the Money Hunt (Page 43) ABA Banking Journal - February 2008 - Retail Banking: On the Money Hunt (Page 44) ABA Banking Journal - February 2008 - Retail Banking: On the Money Hunt (Page 45) ABA Banking Journal - February 2008 - Community Bank Management: The Ugly Truth About Board Relations (Page 46) ABA Banking Journal - February 2008 - Community Bank Management: The Ugly Truth About Board Relations (Page 47) ABA Banking Journal - February 2008 - Community Bank Management: The Ugly Truth About Board Relations (Page 48) ABA Banking Journal - February 2008 - Community Bank Management: The Ugly Truth About Board Relations (Page 49) ABA Banking Journal - February 2008 - Community Bank Management: The Ugly Truth About Board Relations (Page 50) ABA Banking Journal - February 2008 - Community Bank Management: The Ugly Truth About Board Relations (Page 51) ABA Banking Journal - February 2008 - Does Core Really Matter? (Page 52) ABA Banking Journal - February 2008 - Does Core Really Matter? (Page 53) ABA Banking Journal - February 2008 - Security 2.0: Not Just a New Kettle of Phish (Page 54) ABA Banking Journal - February 2008 - A Personal Case of Mal-Serendipity (Page 55) ABA Banking Journal - February 2008 - A Personal Case of Mal-Serendipity (Page 56) ABA Banking Journal - February 2008 - DOD Credit Regs Demand Attention (Page 57) ABA Banking Journal - February 2008 - Mailbox (Page 58) ABA Banking Journal - February 2008 - Mailbox (Page 59) ABA Banking Journal - February 2008 - Mailbox (Page 60) ABA Banking Journal - February 2008 - Banker's Mart (Page 61) ABA Banking Journal - February 2008 - To Advertise/Index of Advertisers (Page 62) ABA Banking Journal - February 2008 - To Advertise/Index of Advertisers (Page 63) ABA Banking Journal - February 2008 - The Economy (Page 64) ABA Banking Journal - February 2008 - The Economy (Page Cover3) ABA Banking Journal - February 2008 - The Economy (Page Cover4) http://www.nxtbook.com/nxtbooks/sb/ababj0414 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