Bank deposits in Cape Girardeau, Bollinger, Alexander counties fall slightly as people, businesses pay off debts

Eleven of 18 banks in the Cape Girardeau area saw local deposits shrink during the last year as people paid down their debts.

Deposits within the Cape Girardeau/Jackson Metropolitan Statistical Area dropped $34.1 million for the fiscal year ending June 30, according to a market share data report from the Federal Deposit Insurance Corp. Banks in that area -- defined by the U.S. Census Bureau as Cape Girardeau, Bollinger and Alexander counties -- showed total deposits of $1.7 billion.

Bank of Missouri, whose deposits declined by 2.8 percent for the fiscal year, still has the largest market share in the area with 13.5 percent. The bank had more than $228.1 million in deposits during the same period, about $6.6 million less than the previous year.

"The market decline in deposits is due to the conservative region we live in and that many have decided to pay down household or business debt," said John M. Thompson, Bank of Missouri president.

Customers have chosen to pay off high-interest credit cards and auto loans, so they aren't saving at the same rate as before or they've taken money out of savings to pay down those loans.

"In the end, it's a good thing for both households or small businesses to do," he said.

Regions Bank had the second-largest market share in the fiscal year, with 11 percent of deposits, $186.3 million. But Regions also saw the biggest drop in deposits, 16.2 percent from 2009 to 2010.

Montgomery Bank had the third-highest market share at 10.5 percent and deposits of $178.1 million. Its deposits grew 24 percent from 2009 to 2010.

US Bank was fourth with 10.2 percent market share and $172.6 million of deposits. Its deposits dropped 5.5 percent from 2009 to 2010. Bank of America was fifth with 9.7 percent market share and $164.9 million in deposits. Its deposits dropped from 2009 to 2010 by 6.8 percent.

In addition to Montgomery Bank, other banks with increasing deposits were Alliance Bank, First Midwest Bank, First State Community Bank, First Community Bank, Banterra Bank and Peoples Community Bank.

Alliance Bank's deposits rose $8.9 million, or 16 percent. The primary reasons for that are "Liquid CDs" the bank began offering about 18 months ago and a business development campaign, said Kevin Greaser, Alliance Bank community bank president. The "Liquid CD" offers customers more flexibility than a traditional CD: It doesn't have a maturity date, can be added to at any time and money can be withdrawn with no penalties once every 90 days, Greaser said.

"Depositors today are weighing the benefit of safety with a low return against taking some risks with other investments like stocks and bonds," he said. "We see a lot of retirees who have accumulated a lifetime of savings, and they want to protect it. They just don't want to risk it."

In the past, banks sought to grow deposits in order to meet growing demand for loans, but in this economy, the demand for loans just isn't there.

"There's no need to grow deposits if you're not growing loans," said Steve Taylor, First Missouri State Bank president. "Demand for loans is down a lot. There was huge demand up until the middle of 2008 on the commercial side for building and development loans. Now businesses are hoarding their cash and holding tight on expansions due to their uncertainty about the economy."

The one exception in loan demand is refinancing. Many homeowners are looking for lower interest rates, better terms and lower monthly payments.

mmiller@semissourian.com

388-3646