Competition among banks heating up

By J. Scott Trubey

The Atlanta Journal-Constitution

As Georgia banks fight their way through a challenging economy, many are also doing battle with newcomers to the state.

Buyers of the state's failed banks and other new entrants in metro Atlanta are beginning to push for business as the industry landscape remains in flux.

For consumers, it may mean a competing bank offers to pay you cash to switch banks. For businesses with strong balance sheets, it’s often better terms on credit lines and banking services.

JPMorgan Chase & Co. has plans to build up to 35 branches in metro Atlanta in the next two years, and has been ramping up its commercial lending business. Chase took over the failed Washington Mutual, and has offered cash incentives for people to move their bank accounts.

Buyers of broken banks have many challenges on their hands. Among the biggest are working out the bad loans they bought from the Federal Deposit Insurance Corp., building name recognition and building new business.

“Everybody that’s healthy needs good quality loans,” said Pat Frawley, president and CEO of Community & Southern Bank, a newly formed institution that has acquired two failed banks in the past year.

Loan demand remains soft for both businesses and consumers, banking experts say. But as banks find fewer avenues for earning assets, they’re instead poaching competitors’ clients.

“Banks are fighting for any good loan they can get,” said E. Jenner Wood III, market president and CEO for Atlanta and Georgia for SunTrust Banks.

Real estate development is still a sore spot. But banks are hot for business lines of credit, loans for medical companies and firms with government contracts, as well as mortgage refinancing.

Banks stunned by the real estate collapse are desperate to diversify their portfolios, and new names are looking to expand on the beachhead they bought in the remains of a failed lender.

“It is intense,” Jenner said of small-to mid-size business lending, which is up 3.5 percent for Atlanta-based SunTrust. “You are always bidding against a number of competitors.”

Total loans by Georgia-based banks were up 2 percent in the second quarter after nearly two years of declines, according to data released Tuesday by the Federal Deposit Insurance Corp.

Metro Atlanta has always been a hypercompetitive market, said Don Howard, president and CEO of Bank of North Georgia, the fifth largest bank operating in the metro area.

The first 10 branches Chase will open will be in Bank of North Georgia’s backyard.

“We’re seeing offensive-minded signs we didn’t see a few years ago,” Howard said. “We’re all after the same slice of the market.”

Bank of North Georgia is redeploying its marketing dollars to radio and print. Other lenders are also ramping up their marketing efforts, including SunTrust.

Wachovia, which is in the midst of changing names to corporate parent Wells Fargo, is starting to see some movement with small businesses loan demand.

Loan volume for companies up to $25 million in revenues is up, as is volume for firms as big as $1 billion, company executives said.

Companies have been sitting on cash uncertain about the economy instead of deploying money and seeking loans for growth. But some are just starting to look for loans—particularly small businesses and firms in healthcare.