By Dan McCue
Staff Writer

If it sometimes seems as if a new bank is sprouting up on every corner, there’s good reason: The Charleston market is just too hot for any lender not to be in the game, said Lloyd I. Hendricks, president and CEO of the South Carolina Banking Association.

“It’s not the only great market in the state, but given the pace of the development and the population growth that’s forecast for the area, it certainly looks like it will be at or near the top in terms of lending activity for some time to come,” Hendricks said.

The other top markets Hendricks identified were Greenville, Spartanburg and the Myrtle Beach area.

What accounts for a market in which the nation’s ninth largest financial holding company announced the relocation of its regional headquarters here and two banks announced the opening of two branches within a single week?

Al Parish, a Charleston Southern University economist, thinks that it’s the aging and growing affluence of newcomers to the area.

“The number one reason banks are looking to come to Charleston is our expanding and ever-wealthier population,” Parish said.

According to the economist, the average household income in Charleston grew from just more than $52,000 a year in 2000 to more than $53,000 a year in 2005.

“A thousand dollar increase isn’t bad for a five-year period,” he said.

But that’s nothing compared to what’s projected to occur between now and 2010. By then, the average household income in Charleston is expected to exceed $60,000 a year.

“That’s a very significant change and one banks are going to take very seriously,” Parish said.

Another statistic Parish thinks banks are taking seriously are projections that the number of Charleston households with annual incomes above $150,000 will increase 27% in the next five years, while the number of households with an income of more than $100,000 will increase 23%.

And then there’s the age factor. Parish said the average age of Charlestonians today is 35 years. By 2010, the average age is expected to be nearly 37 years, with the number of people over 65 growing by almost 20% between now and then.

“So it’s not just a market being driven by loan demand. Our new residents are older, and they also need financial planning help,” Parish said.

Little wonder, then, that when BB&T Corp. announced that it was moving its regional headquarters to Charleston from Florence, it had to vie for attention with word that South Carolina Bank and Trust was opening a new loan production office in the heart of downtown and would add another new loan office on Daniel Island by April.

Just days after SCB&T made its announcement, the First National Bank of the South revealed that it too is opening a loan office on Daniel Island near the Family Circle Cup Stadium on Seven Farms Drive

A few days after that, Harbor National Bank, a new, locally-based independent bank (see story on page 43) announced that it was opening two branches, one in downtown Charleston and one in West Ashley.

Can all these banks survive in such an obviously competitive market? Hendricks thinks they can all find their niche.

“Customers aren’t quite so loyal as they used to be, whatever the business,” he said. “They’ll gravitate to whoever delivers the best service at the best price, and given the diversity of services banks offer today, there’s probably room for everyone to excel in some aspect of the market.”

Robert Hill, SCB&T’s president and CEO, said its entry into the Charleston market is only the beginning of a full-scale push into the region. The bank’s long-term plan, he said, is to establish another five to seven branches in Charleston County during the next several years.

“If you look at our footprint, you can see that our strategy over the years has been to aggressively position ourselves as South Carolina’s community bank,” Hill said. “Frankly, the time is right for this kind of expansion into Charleston. Compare the projected growth rate for Charleston County to just about any community in the Southeast, and the market is about as good as it gets.”

Chris Claussen, SCB&T’s senior vice president in charge of expanding itscommercial lending portfolio and who was formerly the commercial real estate lending manager with Carolina First, said in his 25 years in the banking business here, he has never seen anything like the kind of explosive growth that’s going on now.

“People are moving into the market from all over, driving the development of new neighborhoods, and once the residential units are in, then the supermarkets come, the doctors’ offices,” Claussen said. “What we’ve been experiencing here in Charleston during the past 10 years is nothing short of exceptional growth, and frankly, we don’t see it stopping.”

Claussen said he thinks what’s driving the growth is “the way of life and the climate.”

One other factor that may also be driving the growth is the realization that even in the age of online financial services, nothing resonates more with the banking public than having an actual location they can see, visit and experience, Hendricks said.

“You can’t underestimate the value of the feel of brick and mortar,” Hendricks said. “When people have concerns about their money, they want to feel like they can talk to a real live person about it rather than having to correspond with a machine.

“Whether those customers ever do anything but online banking is not the point. The nature of having a local building is giving the impression that you’re actually there to satisfy the customer’s needs,” he said.

The obvious question, of course, is whether a time will come when there’s simply a glut of banks in the Charleston market. Hendricks doesn’t think so.

“There have been instances like that in smaller communities that just weren’t growing, but I don’t believe you come close to reaching a critical mass in banking in a major metropolitan area, so long as the growth continues,” he said. “Given the projections I’ve seen, we can probably expect this trend to continue for quite some time to come.”

Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.

SUBSCRIBE | REPRINTS | CONTACT US

Phone: 843-849-3100    Fax: 843-849-3122