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Banks set sights on bigger market share

New branches to capture more of the county's business are planned by some institutions.

By TERESA BURNEY, Times Correspondent
© St. Petersburg Times
published February 16, 2003

Hernando County's biggest bank got even bigger last year. First, the quick way, by buying a competitor. Then, the slow way, by attracting even more depositors.

In one year, SunTrust Bank/Nature Coast grew from holding a little more than one third of all the county's total bank deposits to housing nearly half -- 46 percent -- in its vaults, according to Federal Deposit Insurance Corp. records.

Buying Huntington Bancshares last February accounted for most of that growth. The bank managed to add a few more percentage points by attracting new customers.

Still, SunTrust hungers for even more of the local banking pie.

"Our objective is to keep on growing that market share," said Jim Kimbrough, chairman and chief executive officer of SunTrust Bank/Nature Coast. Still, " '03 will probably prove to be a more challenging year than '02 was."

Other local banking executives agree.

In three years, Gerald Archibald, president, chairman and CEO of First Kensington Bank, has grown the institution from an initial 1.69 percent of the market to 5.66 percent of the total deposits. That makes it the fifth largest among the county's 11 banks. But don't expect that kind of growth this year, Archibald warns.

"We are kind of coasting right now," he said.

Kensington offers full-service banking but concentrates on attracting certificate of deposit investors. Archibald thinks interest rates might be artificially low, and he wants to get an idea where rates are going before trying to attract too much more business.

Besides, he suspects many retirees who deposited money in CDs after the stock market's fall may return to riskier investments because they need bigger returns to keep up their standard of living.

Still, Kensington, which added a second branch near the Airport Industrial Park last year, may consider opening one more branch in Hernando this year.

"But it's got to make sense," Archibald said.

Kensington, which began in Spring Hill and is now based in Tampa, has grown to seven branches in Pinellas, Pasco and Hernando counties in the last three years. Archibald said he might add three more and then slow down for a while.

Bank of America, Hernando County's second biggest bank in terms of deposits, is not planning to add any branches in the coming year, said executives of the bank. Bank of America holds 18.75 percent of the county's deposits, according to the FDIC.

"It's pretty much business as usual," said John Ehlenbeck, the bank's local vice president. "We will continue to operate similarly to how we have in the past -- with just good, old fashioned stability."

Still, Ehlenbeck hopes to increase the bank's market share, which has fallen from 20 percent, according to the FDIC. Ehlenbeck says the FDIC numbers can be deceiving because of the way deposits of large banks, such as Bank of America, get counted in counties other than where they were originally deposited.

AmSouth Bank added a third branch in Hernando County last fall by buying the former Huntington branch at Mariner Boulevard and State Road 50, a corner that has become a mecca for banks seeking to snatch more customers.

"That branch has been very successful," said Bob Little, city president for AmSouth in Hernando, Citrus, Marion and Sumter counties. "We are 180 percent ahead of where we projected to be there."

Some of the new branch's business is coming from AmSouth's existing customers, who found the location between the bank's Brooksville and Spring Hill offices more convenient. But the location has attracted new customers as well, Little said.

"We are growing the number of households that bank with us," he said.

Hernando County's newest bank also hopes to find success in the SR 50-Mariner area.

Zephyrhills-based Community National Bank, which opened its first branch in Hernando County in October, is buying 2.2 acres on SR 50 near Mariner and plans to build a branch there by the end of the year, said Morris Porton, the bank's senior vice president. Porton, a fixture in the local banking community, quit his job as an executive at SunTrust to work for Community.

Community's current Hernando branch is in temporary digs in a shopping center at Spring Hill Drive and U.S. 19.

Porton is happy with the branch's performance.

"We have been pleasantly surprised," he said. "I've had a strong loan demand."

Porton hopes Community's new branch will be finished by the end of this year. The building will have two stories, and banking officials plan to lease the upper level to other businesses.

If the bank is still doing well by the fourth quarter of this year, Community will probably begin planning a second branch for Hernando County, Porton said.

While it may look as though Hernando County got another new bank last year when the BB&T name went up on First South's sign on Spring Hill Drive, actually it was a buyout. BB&T Corp. purchased First South's holding company, Regional Financial Corp., last fall.

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