Bank deposits drop in Chattanooga in the past year

Staff Photo by Dave Flessner / Regions Bank, whose downtown office is shown here, declined to be the No. 4 bank in the market in the past year in total deposits behind First Horizon and Truist banks, whose downtown offices also tower over the Chattanooga skyline. Pinnacle Bank replaced Regions Bank as the No. 3 bank in the Chattanooga metropolitan area.
Staff Photo by Dave Flessner / Regions Bank, whose downtown office is shown here, declined to be the No. 4 bank in the market in the past year in total deposits behind First Horizon and Truist banks, whose downtown offices also tower over the Chattanooga skyline. Pinnacle Bank replaced Regions Bank as the No. 3 bank in the Chattanooga metropolitan area.

Bank deposits in Chattanooga dropped by a record $475.4 million in the past year as many pandemic relief programs ended while business and consumer spending continued to increase, according to figures released last week by bank regulators.

The Federal Deposit Insurance Corp. said total deposits in the 29 commercial banks operating in metropolitan Chattanooga totaled $14.8 billion as of June 30, down by more than 3.2% from a year earlier even with the addition of another commercial bank in the market.

But the decline in deposits for the 12 months ended June 30 followed three years of deposit growth of more than 10% a year during the pandemic and its aftermath, when federal stimulus measures boosted savings even as consumers spent less money. Even with the dip in Chattanooga bank deposits in the past year, total bank deposits midway through calendar 2023 in Chattanooga are still up by 45%, or more than $4.6 billion, from their pre-pandemic levels in 2019.

"We're coming back down from unprecedented levels of government spending that boosted deposits at a time when many people were simply not spending as much," said Colin Barrett, president and CEO of the Tennessee Bankers Association. "We're also seeing a lot more competition among banks for deposits, including from those outside the market."

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The six-county Chattanooga metropolitan area gained its 29th full-service commercial bank in the market earlier this year when the Lebanon, Tennessee-based Wilson Bank & Trust opened a branch in Chattanooga. Although banks continue to prune the number of branch offices they operate in Chattanooga, the number of banks in the market reached its highest number since 2012.

From the 2009 peak of 179 bank offices in metro Chattanooga, the FDIC reported the number of bank branches in the Chattanooga market has declined by more than 22% to 139 branch offices as of June 30.

First Horizon, formerly First Tennessee Bank, remained the biggest bank in Chattanooga despite a 13.8% drop in its deposits from June 30, 2022, to June 30, 2023. First Horizon, the biggest bank in Tennessee, agreed last year to merge with Toronto Dominion Bank, but TD Bank called off its proposed acquisition in May, citing regulatory hurdles.

"We are humbled and appreciative to remain number one in market share as we have for several years," Jay Dale, Chattanooga market president for First Horizon, said in a statement last week. "With the TD merger in the rearview mirror, we are now able to refocus on what makes First Horizon so unique. Our team is engaged and engaging with our customers and community, and we are seeing increases in new customers and deposit momentum since the TD merger terminated."

Biggest banks in Chattanooga

Among the 29 commercial banks operating in metropolitan Chattanooga, the banks with the most deposits as of June 30 (and the increase from a year ago) were:

1. First Horizon, $2.8 billion in deposits, down 13.8% from a year earlier.

2. Truist Bank, $2.4 billion in deposits, down 5.8% from a year earlier.

3. Pinnacle Bank, $1.9 billion in deposits, up 8.1% from a year earlier.

4. Regions Bank, $1.7 billion in deposits, down 4.7% from a year earlier.

5. Bank of America, $895.5 million in deposits, down 17.1% from a year earlier.

6. FirstBank, $862.7 million in deposits, up 3.8% from a year earlier.

7. Builtwell Bank (formerly First Volunteer), $661.3 million in deposits, down 4.6% from a year earlier.

8. Citizens Tri-County Bank, $573.4 million in deposits, up 10.8% from a year earlier.

9. Smartbank, $403.8 million in deposits, down 21.2% from a year earlier.

10. The Bank of LaFayette, $371.8 million, down 1.4% from a year earlier.

Source: Federal Deposit Insurance Corp.

Most of Chattanooga's biggest banks reported a drop in deposits in the past year, but the Nashville-based Pinnacle Bank continued to grow its deposit and market share in Chattanooga. Pinnacle, which acquired the former CapitalMark Bank in 2015, was the fastest growing bank in the market, growing its deposits in the past year by nearly 23.3% to $1.94 billion.

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Pinnacle moved ahead of Regions Bank as the third biggest bank in the Chattanooga market for total deposits, behind only First Horizon and Truist banks.

In the Cleveland, Tennessee, metropolitan area, Pinnacle is now the second biggest bank by deposits, behind only First Horizon. Pinnacle grew from the fifth biggest bank in Cleveland in 2022 to the second biggest bank in metro Cleveland this year by growing deposits by more than 25% to $389.34 million.

Statewide, Pinnacle is now the second largest and fastest growing bank in Tennessee by deposits.

"Pinnacle is perfectly positioned to succeed because of its unique combination of distinctive client service and the resources to bank major industry players," Craig Holley, Pinnacle's chair in Southeast Tennessee, said in a statement about the bank's growth. "Our growth is rooted in our culture and the fact that Pinnacle is a values and relationship-based firm, builds long lasting partnerships with its clients and is one of the best places to work anywhere in the country."

Contact Dave Flessner at [email protected] or 423-757-6340.

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