M&T Bank Corp. cemented its position as the leading bank in Western New York, with cross-town rival First Niagara Financial Group in a strengthened second-place position after its purchase of HSBC Bank USA’s branches, according to the newest deposit market share figures from the Federal Deposit Insurance Corp.
Buffalo-based M&T dominated the deposit rankings for the Buffalo Niagara region with $13.79 billion, spread among 59 branches. That’s 42.75 percent of the entire market of $32.3 billion in deposits.
First Niagara, also based in Buffalo, held $8.45 billion, or 26.2 percent of the market, also in 59 branches. Other area banks were much further behind.
However, the data – a once-a-year snapshot of the market from June 30 – is an incomplete and inaccurate picture this year because of the massive turmoil from the sale of HSBC’s entire upstate New York retail branch business to First Niagara.
That sale was completed in mid-May, but the subsequent divestitures of 64 of the 195 branches closed in five additional pieces, all after June 30, so that the final results are not reflected in the June figures.
In fact, HSBC is still listed in third place in the market, with 30 branches and $2.83 billion in deposits, for an 8.76 percent market share. It’s followed closely by Cleveland-based KeyCorp with $2.66 billion, or 8.26 percent of the market.
But that was before First Niagara – which actually owned almost all of those HSBC offices by June 30 – had sold 26 of them to Key, with $1.64 billion in deposits. Key also bought 11 branches in the Rochester area, with $800 million in deposits.
First Niagara also sold one branch in Springville to Community Bank System over the summer, as part of a larger pair of sales of 16 HSBC offices and three of its own offices to Community Bank. It also sold eight branches to Financial Institutions, parent of Five Star Bank, in two deals of four offices each. Except for the one Springville office, none of the Community or Five Star purchases were in Erie or Niagara counties.
Factoring in those transactions, Key would jump to third place with $4.3 billion in deposits, in 68 branches, for a market share of about 13 percent, while HSBC would drop to about seventh place, with just about $1 billion in deposits. HSBC retained its commercial, corporate, private and investment banking businesses locally, including those customers’ deposits.
Citizens Financial Group, the subsidiary of British-government-owned Royal Bank of Scotland Group Plc, was fifth, with $1.5 billion in 43 branches, or 4.65 percent, followed by Bank of America Corp., with $1.22 billion, or 3.79 percent of the market, in 34 branches. Hamburg-based Evans Bancorp was next, with $606 million in deposits at 13 offices, for a 1.88 percent market share. All other banks held less than 1 percent of the market.
M&T’s tally represents a 35 percent increase in deposits over a year ago, when the bank held $10.2 billion locally, or 38.96 percent of the market.
But officials said that $1.7 billion of that growth consists of “non-local” corporate and other deposits that were reclassified from Wilmington Trust Corp.’s Delaware headquarters to M&T’s main office at One M&T Plaza. Even so, the bank gained significant deposits locally, especially from customers who were unhappy with the market changes.
“Clearly there was a lot of disruption in the marketplace, and a lot of businesses and consumers were looking for a strong bank alternative with a big branch network and a history and experience of serving the Western New York market, and a lot of them found that at M&T,” said spokesman Chet Bridger, citing $500 million in deposit growth at branches throughout the region. He also cited “pretty good growth” for M&T across all of upstate New York. Banks often hold deposits from large corporate or institutional customers in their central offices, so headquarters offices often report highly inflated deposit numbers. That’s long been an issue with measuring HSBC’s local market share, because the Buffalo office held significant deposits that were not from the local, retail market.
To measure retail market share, from consumers and small businesses, some experts suggest taking out the headquarters branches, since neither the FDIC nor the banks themselves break out how much of their headquarters deposits are from outside the local area. M&T holds $9.52 billion at One M&T Plaza, while First Niagara holds $3.786 billion at its Larkin Building headquarters.
Not counting those deposits, First Niagara actually leads locally by a notch, with $4.66 billion in deposits, or 36 percent, compared with M&T’s $4.27 billion, or 33 percent.
“The latest FDIC data confirm that First Niagara’s HSBC-branch acquisition strengthened our position as a Northeastern regional banking leader,” said First Niagara spokesman Oliver Hays. “Having virtually doubled our branches here, we are now positioned to become an even more prominent player in the years ahead.”
More broadly, within the eight-county Western New York region, M&T led with $14.34 billion in deposits at 83 branches, or 38.87 percent of the market. It was followed by First Niagara, with $8.82 billion in 68 branches, or 23.91 percent of the market.
HSBC was next, with $3 billion, or 8.14 percent, followed by Key, with $2.93 billion, or 7.94 percent. Citizens and Bank of America were fifth and sixth, with $1.5 billion or 4.09 percent and $1.3 billion or 3.54 percent, respectively.