Strategic Branches Ensure Customers

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Picking the right location for any business is important, but it may be one of the most important factors in building a retail bank branch.
Location dictates traffic, and traffic frequently dictates deposits, which, many bankers agree, leads to loan business and even more deposits.
The Northwest Arkansas Business Journal wondered which banks were winning at the branching game, and if deposits had drifted from one area to another since 2004, the year three new banks were announced and at least two others began moving into Benton and Washington counties. We also looked at the top branches in the Fort Smith area.
Each bank’s main office was intentionally omitted because some banks buy brokered deposits and deal with trust services or commercial accounts that are typically located at the main office and would therefore skew true branching deposits.
Arvest Bank Group Inc. technically has one main office, chartered in Fayetteville. But the bank operates several “autonomous community banks” and allows market presidents to make choices about building branches, loans and, presumably, buying deposits. Therefore, the bank’s main offices in Bentonville, Fayetteville, Fort Smith, Siloam Springs, Springdale, Rogers and Prairie Grove were excluded and only each city’s branches were compared.
Main market offices for banks based out-of-market, such as Regions Bank, were also excluded.
For a comparison of the six-county market’s top 20 main bank offices by deposits, click here.
As of June 30, there were 41 different banks and 292 offices in the six-county market, according to the Federal Deposit Insurance Corp., so an office on the right corner can mean the difference between stunning success and lackluster performance. (As of June 30, 2003, there were 37 banks and 245 offices).
There were $7.17 billion in total 2006 deposits in Benton and Washington counties and $2.68 billion in Crawford and Sebastian counties.
The entire six-county market had $10.51 billion in deposits as of June 30, up 36 percent from three years previous.
Branch Winners
The somewhat murky winner for the six-county market was the First Security Bank office on W. Emma Avenue in downtown Springdale. It is the single largest branch in the market with more than $157 million in deposits, according to the FDIC.
The office was the main location of the First National Bank of Springdale, which was acquired by First Security Bancorp in 2003. Searcy-based FSB has always considered its Fayetteville Joyce Boulevard office as its main market location, so the Emma office became a branch.
Many bankers said longevity of operation and long-time employees are indicators of how many deposits any one location has garnered.
The two-story FSB structure was built in 1962, said Mike McFarland, Springdale market president, so it’s the oldest office in the top 10 comparisons. One of the branch’s frontline employees is a 31-year veteran of various ownerships of the bank.
The second floor now houses many of FSB’s back office operations for Northwest Arkansas.
The office has lost about 14 percent of its deposits since mid-2003, but FSB has grown deposits across town at its W. Sunset Ave. office by more than 500 percent, making it the No. 3 branch in the comparison.
In at No. 2 was the Arvest Bank on Joyce Boulevard in Fayetteville, with $129 million in deposits, which grew deposits by 114 percent over the same period.
The office was built in 1992 and there are plans to relocate it in 2008 across Joyce Boulevard and east about a half-mile.
Chris Guinn, vice president and branch manager, has been at the office since 2003. He said his team didn’t do anything special to increase its deposits over that time, but that the location is prime with the migration of retail and medical business to northern Fayetteville.
On average the office makes about 41,000 teller transactions per month, Guinn said.
About 50 percent of the office’s deposits are made up through commercial business.
Arvest, which subscribes to the Starbucks philosophy of densely populating its locations for convenience, has three other locations within a mile of Joyce Boulevard.
The rest of the top 10 offices are in Benton County, with three in Rogers, two in Bentonville and one each in Lowell and Bella Vista.
Six of the top 10 branches are Arvest banks. Despite the entrance of competitors, the top 10 branches saw deposits increase by nearly 21 percent during the three-year period.
All in all, it doesn’t appear new and new-to-the market banks such as Springdale’s Legacy National Bank, Fayetteville’s Signature Bank of Arkansas or Rogers’ Pinnacle Bank have sucked deposits from established branches over the last three years.
Fort Smith Winners
Many banks consider Fort Smith and the Arkansas River Valley as a different market than Benton and Washington counties.
There is some overlap with banks like Liberty Bank of Arkansas and Bank of the Ozarks. In those instances, the main or largest offices in Crawford and Sebastian counties were excluded.
The clear winner in terms of successful branching strategy in Fort Smith is BancorpSouth Bank, chartered in Tupelo, Miss.
BancorpSouth has three of the top five branches in the area, with a total of $185.1 million in combined deposits.
In terms of branch deposits, BancorpSouth and Regions Bank, based in Birmingham, Ala., beat locally owned First National Bank of Fort Smith, which actually has most of the two-county market share (nearly 23 percent), according to the FDIC’s June data.
BancorpSouth comes in second for area market share (20.8 percent), and Regions is No. 5 (8.8 percent).
A Citizens’ Bank & Trust Co. office in Alma, which is owned by the holding company that also owns FNB of Fort Smith, came in at No. 5 in branch deposits with $57.9 million.
ZIP Winners
The most affluent ZIP code in Northwest Arkansas is 72703 in Fayetteville with $1.06 billion in total deposits.
Main offices were included in a sorting by ZIP code and data is from June 30.
That geography does not include Arvest’s main office in downtown Fayetteville, or The Bank of Fayetteville’s main office, but does include the “new financial district” of Fayetteville along Joyce Boulevard and the headquarters of startup Signature Bank, which had $146.6 million in deposits.
The ZIP code has seen deposits jump 107 percent from $511.6 million since 2003, further indication that startup banks haven’t nibbled away too much at established offices.
There were 16 different banks with 24 offices in the 72703 ZIP code, up from 12 and 20 respectively in mid-2003.
The No. 2 ZIP was 72712 in Bentonville with $1.05 billion in deposits, up from $664.2 million three years earlier, followed by 72901 (Fort Smith, No. 3) with $935.7 million; 72764 (Springdale, No. 4) with $834.6 million; and 72756 (Rogers, No. 5) with $832.9 million.