National Commerce Financial expands into Florida through the retail giant's stores. It's cheaper, plus Wal-Mart draws thousands more people.
By JEFF HARRINGTON
Published April 24, 2004
A Memphis pioneer in grocery store banking has inked a deal to put about 70 branches inside Wal-Mart stores throughout the Southeast, including more than 50 in Florida.
National Commerce Financial, which is making its first foray into Florida, said 75 percent of the new branches will be in Tampa/St. Petersburg, Orlando and Jacksonville, along with several in small and mid-size communities. The bay area alone can expect 10 to 12 in-store branches, said Tim Schools, National Commerce senior vice president of strategic planning and investor relations.
The remainder of the stores will be in Georgia.
"Following our current build-out of the Atlanta metropolitan area, Florida was the next logical extension of our footprint," said Christopher T. Holmes, executive vice president responsible for National Commerce's Wal-Mart strategy.
The first Florida branch is expected to open in the third quarter of 2004 with the remainder opening throughout 2005. They will be branded as National Bank of Commerce sites and offer traditional services such as loans, deposits and mortgages.
But don't look for the Memphis institution to follow up by building stand-alone branches or acquiring other banks here.
"We're going to run a different model," Schools said. "What we've found is that with Wal-Marts averaging 50,000 customers a week ... we didn't need the traditional branches."
Partnering with the world's largest retailer has its benefits.
National Commerce put its first branches inside a Wal-Mart in 1997. Today, it counts those 20 Wal-Mart locations among the best performers in the company, with some branches approaching nearly $70-million in deposits.
Financial terms of the expanded deal with Wal-Mart were not disclosed.
With $23-billion in assets, National Commerce bills itself as the 32nd-largest bank in the country.
Throughout its history, the Memphis institution has garnered a reputation as being willing to experiment. It has largely grown organically instead of through acquisitions.
And it was a pioneer in grocery store branches. Today, up to 40 percent of its roughly 500 branches are in grocery stores.
It has relationships with five grocery chains, the largest being its deal with Kroger.
Traditionally, National Commerce has expanded by a "hub-and-spoke" system, with a mix of grocery store and stand-alone branches.
But it began experimenting in the mid 1990s with a Wal-Mart-only strategy; its success in markets such as Chattanooga, Tenn., has persuaded it to try Wal-Mart-only in Florida.
It's a matter of numbers, Schools said.
"If you and I were to build a branch on Dale Mabry today, it might cost $2-million ... and a traditional branch gets 3,000 customers a week," he said.
"We're going to go into Wal-Marts all over Florida and it's going to cost us $150,000 to $200,000 for the Sheetrock, to put in computers and counters ... and in seven days we'll have 50,000 people walking through. It's a no-brainer."
Separately, National Commerce has been experimenting with the megaretailer since October on co-branded, in-store branches called Wal-Mart Money Centers.
Twenty locations have opened but there has been no decision whether to expand the pilot program.
The grocery-store branch strategy has not been for everyone.
In 1999, the Canadian Imperial Bank of Commerce and Winn-Dixie Stores joined to open in-store branches called Marketplace Bank throughout Florida, including 25 in the Tampa Bay area. But the Canadian bank retrenched after three years.
It was the second big realignment for Winn-Dixie. In 2000, Bank of America pulled its in-store banking centers out of 66 Winn-Dixie locations across the state as Florida's biggest bank decided to align itself solely with Publix.