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The main Suncrest Bank branch at 501 W. Main Street in Visalia may close as part of the proposed merger between Suncrest and Citizens Business Bank. The branch features a café run by a local vendor. File photo

published on November 9, 2021 - 2:07 PM
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It has been a period of mergers and acquisition as banks vie to grow market share in Fresno, Tulare, Kings and Madera counties.

Wells Fargo remains at No. 1 for market share across the four counties, despite the Federal Deposit Insurance Corp. initial misreporting of numbers making it appear as though Wells market share fell by more than 6%.

The revised numbers were released Oct. 15.

“Wells Fargo continues to have a large and stable core deposit base in Fresno and we attribute this success to our amazing employees who work hard to deliver the best service and advice for our customers,” said Wells Fargo Central California Region Bank President Ernie Pineda.

The onset of the pandemic stoked economic uncertainty, but Rocio Bell, senior vice president and regional incentives manager at Bank of America, said growth has been steady.

Bell attributed the growth to investing in digital platforms for clients, which allows for self-service.

When Covid hit, both Bank of America and Wells Fargo offered help by waiving fees and deferring payments.

Fresno First Bank grew its market share in the area by 0.28% from 2020 to 2021. It’s up by 1% from 2019.

President and CEO Steve Miller said that the bank has a yearly goal to grow its customer base, and the Paycheck Protection Program helped attract new customers, which turned into deposits. The PPP served as a major catalyst to the bank’s overall growth during the pandemic. Fresno First Bank is listed at No. 11 out of 23 for market share rankings in the area.

“Over the last four or five years we’ve been averaging anywhere from 25 to 35% growth in terms of new relationships,” Miller said.

New customers aid in moving their deposits over, and since deposits determine market growth, growth happens naturally, he said.

“As a percentage of the size of our bank we did twice as much as most banks in the country and twice as much as most banks around here,” Miller said.

He said that several customers who switched banks were unhappy with how their previous banks executed the PPP during the early months of the pandemic.

“Not only did we do PPP for them, but we were able to move their entire relationship over to the bank. I think naturally we’ve been good at that for the past four or five years, but last year the PPP was a big kick to us along with a lot of other community banks,” Miller said.

Fresno First Bank has customers in 30 states — made possible by financial technology products.

“We only have one branch. So technology has allowed us to expand our addressable market, but that doesn’t necessarily equate to market share just in Fresno,” Miller said.

“I think community banks reminded everybody of why a good local bank and a community bank is important for the market,” Miller added.

David Brager, chief executive officer of Citizens Business Bank, said that most of its banks have grown their deposits over the last year.

Citizens Business Bank operates 58 locations throughout the state, and Brager was the one to open the Fresno office 18 years ago. This year the bank grew its market share in the four counties by 0.41%. He attributes the growth to fiscal, stimulus and monetary policy changes and the impact of lockdowns. People have obtained more balances in their accounts, he said.

“There’s an enormous amount of liquidity that’s in the marketplace right now. And many people put that liquidity in banks,” Brager said.

He made it a priority to keep all bank branches open during Covid. And while the hours might have been limited, access was still available to customers.

Deposit growth has helped the bank have the liquidity to lend to businesses, though loan demand wasn’t as great as it normally would have been, he said.

“That’s why a lot of this liquidity or the deposits that customers have is sitting on banks’ balance sheets right now,” Brager said. “It’s nice to have the liquidity, but then you’re also tasked with going out and finding quality loans or investments to make so that you can provide a return to your shareholders.”

At the end of July, Citizens Business Bank announced it would be merging with Suncrest Bank, headquartered in Visalia. The merger hasn’t been recorded on this year’s market share report since the transaction hasn’t closed.

Mark Flannery, Bank of America professor of finance at the University of Florida, said that bank mergers are happening both nationally and locally.

“After many years of an increase in the number of bank branches in the U.S., the past few years it’s turned around and there has been a reduction in the number of bank branches,” Flannery said.

There’s also been an increase in mergers. It’s happening because mergers mostly accompany branch closures when two different banks are too close to each other. When they become united under one brand after the merger, the bank needs to close one branch.

“Acquisitions which have been on the rise, would be one reason for branches closing,” Flannery said.

That appears to be the case for Suncrest with a recent public notice from Citizens Business Bank that closures are contemplated for the main Suncrest Visalia branch and North Fresno branch.

Closures can also be attributed to remote banking. Branches are an important way of reaching retail customers, but the means by which customers make deposits and use the bank are getting more remote and less reliant on the branch itself.

“As bank lending becomes more and more digitized, that is based on hard information, the loan decisions — at least for retail people like you and me — are being made centrally, they’re not being made at the branch level anymore because the information is all equally accessible to a central repository,” he said. “It doesn’t need the branch to collect.”

Flannery says this puts community banks in a hard position, but they’ve been in tough spots leading up to this just because of regulatory compliance.

Over the past 10 years there’s also been an increase in regulatory burdens, in most cases, causing small banks to hire an expert to keep up with them. But this position doesn’t yield any profit for banks.

“Whereas if you sell yourself to a larger bank, they’ve already got a regulatory compliance office, and adding the small bank in doesn’t cost them very much,”

Flannery said.

Fintech has been rumored to challenge bank market share, creating more avenues for people to spend, invest and save money.

“I think originally, fintechs were about taking banks’ market share. I think now there’s a lot of fintechs that have realized that if they partner with banks to create easier ways to access your funds, I think in some situations that helps banks do a better job at attracting deposits,” Brager said.

While in the early years of new fintech development and platforms, many financial institutions feared it might replace banks, though fintech didn’t directly impact deposits for Citizens Business Bank.

Brager says that these companies are much more willing to work with banks, but Flannery described the changing relationship. Banks are not the only source of loan origination now.

“If I can apply for a mortgage over the internet, I don’t need to go into the local branch anymore and talk to the mortgage lender,” Flannery said.

It reduces the attractiveness of spending money to maintain the branch.

“On the lending side, it’s pretty clear that fintech is going to be putting pressure, or has put pressure, on bank branches. On the deposit side it’s less clear, because the fintech innovations that take in deposits or give people an opportunity to invest — those have been less substantial so far than the fintech innovations on the lending side,” Flannery said.


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