Ingrams July 2023

The 10 largest banks in this market ac count for nearly 70 percent of the re gion’s deposit market share. That leaves 110 others to scrap it out for the remain ing 30 percent share. Fewer than 25 banks have as much as a 1 percent mar ket share; 95 others are fighting the good fight at less than 1 percent each. This is not entirely a bad thing, says Jim Rine, president and CEO of UMB Bank, No. 1 on that market share list with 25.92 percent of the region’s deposits. “Kansas City has always been a com petitive market for deposits, and that will continue, regardless of environment, which is a benefit to businesses and con sumers,” Rine said. Locked in a battle with Commerce Bank for market dom inance for years, UMB has pulled away in the past five years and has now more than doubled the deposit holdings of its “Kemper Cousin.” And Commerce is the only other regional bank with a dou ble-digit market share, at 11.52 percent. Combined, they hold more than 38 per

Still, he said the record-low checking deposit index was a real concern. Two straight record-set ting lows with checking deposit in dices point to high er deposit outflows even for commu nity banks, he said.

to be flexible, nimble, and responsive to their specific needs. Our customers work directly with decision-makers and know they will receive prompt, strate gic advice and service. This is one of our main differentiators and why we’ve con tinued to be the deposit market leader in Kansas City. Simply put, we are a cus tomer experience organization.” If you factor in increasing regulato ry costs and other industry dynamics, banks at the other end of the spectrum will continue to feel enormous pressure. Since 1985, the nation has seen the num ber of banks fall from an all-time high of 14,417 to 4,136 today—a decline of 71.3 percent. That, Giles says, isn’t over. “I think there will continue to be consolidation in the Kansas City market, and it’s probably going to be at or above the national figures,” he said. “But that won’t be due to poor health; I think the Kansas City banks are in good health, so I don’t believe it’s going to be the result of serious financial trouble. It’s more about

Brent Giles, CEO Hawthorn Bank

“Only 15.4 percent of bank CEOs in Creighton’s survey see the banking insol vency crisis as over, while the remaining 84.6 percent expect banks to continue to report insolvency challenges.” The survey also revealed a bit of re sentment brewing in the C-suites of community banks, with one respondent lamenting that “the liquidity problem will continue for some time, and we will see more regulation because of it. And as a bonus for their being late to the ta ble,” he said of regulators, “we will all pay higher FDIC payments for as long as we can see.”

Regional Market Dominance The region’s 10 largest banks by market share command a huge share of deposits:

Bank

Area Deposits $22,245,639,000 $9,884,280,000 $6,393,663,000 $4,979,002,000 $3,249,668,000 $3,139,576,000 $3,007,530,000 $2,203,366,000 $2,189,926,000 $2,045,440,000 $59,338,090,000 $26,499,753,000 $85,837,843,000

KC Market Share

UMB Bank

25.92% 11.52%

Commerce Bank Bank of America

7.45% 5.80% 3.79% 3.66% 3.50% 2.57% 2.55% 2.38%

U.S. Bank

Central Bank of the Midwest Capitol Federal Savings Bank Security Bank of Kansas City

30.87 % $26,499,753,000 110 Other Banks

CrossFirst Bank Bank Midwest Country Club Bank

69.14 % $59,338,090,000 Top 10 Banks

Top 10 Totals

69.14% 30.87%

Totals for 110 Others

Regional Totals

100%

Source: FDIC

In the Kansas City market, that presents particular challenges for small banks—and there are many. Reflecting this region’s status as one of the most competitive banking markets in the na tion, the FDIC shows 120 banks operat ing between Topeka and Sedalia. Much of that competitiveness, tho ugh, is anchored below the top tier.

getting the size and scale to produce satisfactory returns for shareholders.” What’s broken, he says, are not the financial conditions facing community banks. “It’s the business model,” Giles says. “You can’t earn as much with tight margins and increased costs. The need to scale and thrive will drive consolida tion.”

cent of deposits here, easily surpassing national brands like Bank of America, Wells Fargo, and U.S. Bank. You don’t build that kind of domi nance without offering something to stand out from the pack. Rine, then, has reason to boast when he says, “Our de posit success is directly tied to our strong customer relationships and our ability

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I ng r am ’ s

Kansas City’s Business Media

July 2023