Strand strong for growth, but local institutions are gaining most

By Jenny Burns, The Sun News

Small local banks have been gaining market share on the Grand Strand for the last few years despite a strong foothold by their national larger counterparts, according to reports released this week from the Federal Deposit Insurance Corp.

The reports also show that bank deposits - the amount of money deposited into banks - grew at a faster rate in Horry County than the state average in 2006.

Meanwhile, all sizes of banks are planning to add new branches throughout the Strand - a market they see as booming and vibrant.

Community banks are thriving on the Strand because customers still want a know-your-neighbor kind of service and businesses trust banks that understand the seasonality of the local tourism industry, said Robert Burney, associate finance professor at Coastal Carolina University.

Some consumers also like choosing a bank where the decision makers have a stake in the local community, Burney said.

Myrtle Beach-based Coastal Federal Bank continues to hold the top spot in Horry County's market share for the sixth-straight year, meaning it has the largest dollar amount of deposits in the county.

However, Coastal Federal's market share did fall from 17.9 percent in 2005 to 15.7 percent in 2006, according to the FDIC.

The bank's makeover in 2005 which expanded banking hours and opened branches on Saturday has attracted new busy customers, said Mike Gerald, Coastal Federal's chief executive officer.

The bank also added free coin counting machines, free gifts with a new account and started issuing debit cards the day a customer opens a new account, he said.

"Our business model is based on customer service and convenience," Gerald said.

Carolina First Bank, a Greenville-based company, is second with a 12.9 percent market share and Conway National Bank comes in third at 11.8 percent.

Larger banks Wachovia, BB&T and Bank of America are fourth, fifth and seventh in market share, respectively.

Wachovia gained market share, moving from 8.02 percent to 8.67 percent, while BB&T held mostly steady moving from 8.2 percent to 8.19 percent.

"This is pleasing for us because it looks like a couple other banks moved up [in market share] but a couple moved backward," said Dale Zeglin, Wachovia market president for Horry and Georgetown counties.

Bank of America lost market share from 7.79 percent to 6.66 percent.

Regional and national banks say they lure customers by offering large networks of ATMs and bank branches across the country to give travelers better convenience.

National Bank of South Carolina is sixth, while local Beach First National Bank moved up to eighth from 10th place.

In Georgetown County, Pawleys Island-based Plantation Federal owns the most market share at 18.5 percent, but that's down from 19.9 percent in 2005.

Plantation Federal Chief Executive Officer Ed Norris says new banks that moved into Georgetown County in the last two years have hurt its market share.

But customers continue to choose Plantation Federal because it gives back to the community and is committed to the area as it celebrates its 20th year, Norris said.

Carolina First ranks second at 12.7 percent in Georgetown County and First Federal is third at 12.1 percent, up from 10.3 percent in 2005.

Burney says the success of small banks is a reaction to the string of mergers that happened after banks were deregulated in the 1980s.

"As banks merged and merged and merged, they got a whole lot less personal," he said.

That left space for other banks to come into the market, such as five-year-old Crescent Bank.

Chief Executive Officer David Morrow said Crescent opened because the merger between Carolina First and Anchor Bank created an additional niche for a small-business lending bank.

Crescent has consistently grown its market share since it opened, climbing to No. 9 in Horry County from 11th in 2005.

Morrow said two new branches opening in Conway and Garden City in the last year have improved the four-branch bank's visibility and market share.

There's no question Horry County is a hot spot for all sizes of banks. The county maintains its place as the fourth-largest deposit market in South Carolina, but it grew at a faster rate than its larger deposit markets and the state average with a 15.5 percent growth in deposits.

Almost all banks - small and large - said they're planning to build new branches on the Strand.

BB&T is looking to open new branches on the south Strand while Coastal Federal is planning new ones in Brunswick County.

BB&T is focused on growing along the S.C. coast, with eight new locations on the drawing board, said Frank Bullard, president of coastal region of South Carolina for BB&T.

Wachovia is looking at a new location in the Grande Dunes area as well as the south Strand, Zeglin said.

Bank CEOs say retiring baby boomers help drive increased bank business.

"We're seeing a large increase in retail deposits as more build second homes and as baby boomers continue to retire. We're seeing more household growth than commercial growth," said Scott Plyler, executive vice president for Carolina First, ranked second in local market share.

Local bank CEOs also say they can tailor their products to the needs of the community.

Beach First has focused on structuring business loans to make them less complicated.

"We understand the tourism industry and how to lend money to those businesses. That's driven a lot of our success on the deposit as well as the loan side," said Walt Standish, president of Beach First.