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Jim Ross: The consolidation of banks is bringing lending power locally

November 13, 2018

You know all that money that’s coming into northern West Virginia from all the shale gas activity? It seems that some of it is making its way to Huntington, and not in the way most people might think.

When Huntington-based First Sentry Bank was acquired by Wheeling-based WesBanco Inc. a few months ago, that gave the former First Sentry office on Huntington’s South Side access to the tens of millions of dollars deposited by people receiving royalties from companies that drill for gas north of U.S. 50.

“It makes us competitive on deals we couldn’t do before WesBanco. In fact, we’ve approved a loan that’s more than triple our previous legal lending limit,” said Geoff Sheils, Huntington market president of WesBanco and former president and CEO of First Sentry.

John Iannone, director of investor relations for WesBanco, said deposits from gas royalty owners and others in the shale region of West Virginia, Ohio and Pennsylvania are in the eight-figure range thanks to drilling activity and higher gas prices.

“We use that money to help fund our loan growth across all of our markets,” Iannone said.

WesBanco operates in five states and has been expanding in high-growth markets. Its acquisition of First Sentry allowed it to fill the gap between its markets in West Virginia and in Kentucky.

Every year, the Federal Deposit Insurance Corp. releases data on deposits at each bank branch in the United States as of June 30. This year’s release showed that BB&T branches had the most deposits in West Virginia at about $5.26 billion in 63 offices. United Bank was second with $4.3 billion in 51 offices, then WesBanco at $3.05 billion in 50 offices, and City National with about $2.52 billion in 57 offices.

Statewide, deposits totaled about $33.28 billion this year, up about 1 percent from 2017 to 2018.

The thing about looking at bank deposits is that it is probably the most easily accessible data on how multi-state banks perform in different areas. For example, City National, whose corporate offices are in Cross Lanes, is the largest West Virginia-based banking company with more deposits in West Virginia than in other states.

Among banks with a local presence, Premier had 2.16 percent of the deposits in West Virginia bank branches and Huntington Federal Savings Bank had 1.35 percent. With Premier’s recent acquisition of First Bank of Charleston, its deposit share increases to 2.58 percent, which still is not enough to jump past that of First Community Bank, which is based in Bluefield, Va.

The six largest banks in West Virginia all have a presence in the Huntington market, with WesBanco being the last to enter when it acquired First Sentry earlier this year.

In Cabell County, WesBanco, which wasn’t here a year ago, led in deposits with 20 percent of the market, followed by Huntington Federal, Chase, BB&T and City National. Those five banks accounted for 76 percent of market share.

In Wayne County, eight banks operated nine branches with United having two branches there. As it happens, United also had the largest market share for deposits with 29 percent.

One other thing about the banking industry in West Virginia: As of Sept. 30, the FDIC listed 53 banking institutions in the state. That number has decreased by one since then with Premier’s acquisition of First Bank of Charleston. The 53 institutions was 15 less than the number the FDIC counted 15 years ago, so industry consolidations mean the state is losing one banking company per year, with few if any being formed in recent years.

Jim Ross is a Cabell County resident and opinion page editor of The Herald-Dispatch. His email is jross@statejournal.com.

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