Like their peers, financial institutions in Central Kentucky have adjusted quickly to many changes in their industry over the past few years to include new technologies and a pivot to more online banking.
The Lexington-Fayette market area has 37 banking institutions holding $15 billion in customer deposits in the local metropolitan statistical but another $5.5 trillion outside the MSA, according to the Federal Deposit Insurance Corp. (FDIC). With 19 of the 37 having total deposits of more than $1 billion, Central Kentucky market bankers have the assets, strength and tools to take on any need their clients bring to them.
The Kentucky banking industry as a whole is responding to the increase in attempted fraud. In August 2023, the inaugural Kentucky Banking Association Fraud Prevention Program was held in Lexington. The program began on a smaller scale at Lexington-based Central Bank in 2019, then grew to include other banks in the commonwealth, training them on ways to spot and reduce fraud.
About 100 individuals representing 70 Kentucky banks attended with members of the U.S. Secret Service, Kentucky district attorneys, police officers and others at the downtown Lexington Hilton.
The program was spearheaded by Central Bank’s Director of the Central Bank Fraud Intelligence and Security Unit Shane Ensminger, along with the KBA.
Technology meets customers where they are
City National Bank now has 11 locations across Central Kentucky in Fayette, Jessamine, Harrison, Nicholas, Montgomery, Woodford and Franklin counties, according to First Vice President and Region Retail Manager of City National Bank Michelle Buerger. Current deposit figures at CNB across all markets are $6.1 billion.
Buerger said there’s a balance between personal financial interactions and the convenience of technology, and her bank strives to offer both as preferred.
“Customers want easy access to their money along with tools to help them with budgeting and financial planning while still being able to speak to someone when questions arise,” Buerger said.
For the tech-inclined, CNB has a highly rated, features-packed mobile app offering person-to-person payments with Zelle, budgeting tool Money Manager, external account transfer ability, mobile bill pay and more.
In today’s 24/7 global economy, it may be inconvenient for customers to wait to access money or make transactions during regular banking hours, and banks are responding with enhanced services.
“City’s video bankers allow customers to take care of everyday transactions during extended hours on evenings and weekends,” Buerger said.
“Combining the accessibility of an ATM with the personal service of a live banker, City video bankers allow customers to video chat with a City banker to deposit or cash checks, make withdrawals, transfer funds, make payments, etc. in the drive-thrus at the Lexington Main, Palomar and Tates Creek branches.”
Spring is a time for growth, and so it’s fitting that in March 2023, CNB completed its acquisition of Citizens Commerce Bank, headquartered in Versailles.
The acquisition was structured as a stock transaction valued at approximately $62.1 million, or $15.37 per share of Citizens common stock, with each share of Citizens common stock being exchanged for 0.1666 shares of City common stock. Based on year-end 2022 financial data, the combined company has $6.2 billion in assets, deposits of $5.2 billion, and gross loans of $3.9 billion, strengthening City’s presence in the Lexington metropolitan statistical area (MSA).
Meeting industry challenges
Louisville-based Republic Bank, which has 47 banking centers in five MSAs in five states (including six in the Lexington MSA), has approximately $6.4 billion in assets.
Republic President/CEO Logan Pichel characterized some of the industry’s challenges in the quarterly announcement.
“The banking industry continues to face challenges driven by rising interest rates and an inverted yield curve resulting in a notable shift from low-cost and no-cost deposits to significantly higher-cost, interest-bearing deposits and borrowings,” Pichel said. “This has exerted pressure on net interest margins and deposit balances, but we are confident in our ability to effectively manage through these industry challenges.”
He noted core banking operations reported net income of $13.2 million, a 12% decrease in net income compared to 3Q 2022.
In October, the bank announced it had been named to Newsweek’s Best Online Lenders in America for 2024 in multiple categories. The rankings looked at more than 2,500 financial institutions, including best rates offered to customers, satisfaction and availability.
Todd Ziegler, Republic’s market president, Central Kentucky, also cites the bank culture.
“Despite the challenging banking environment, we’re operating from a position of strength in Central Kentucky because we stay true to our purpose—doing what’s right for this community, and helping our clients, associates and the community to thrive,” Zeigler said.
PNC Bank released its third-quarter 2023 statement in October, with net income of $1.6 billion, up 5% over the previous quarter. Total revenues were $5.2 billion, down 1% over the prior quarter, and net interest income was down by 3% over the last quarter. Even so, non-interest income rose $32 million, or 2%.
PNC Bank Chairman/President/CEO Bill Demchak said of this news, “PNC delivered strong results in the third quarter. We generated positive operating leverage, controlled expenses well, maintained strong credit quality and further increased our capital levels.”
Other news for PNC included acquisition of a portfolio of capital commitments facilities from Signature Bridge Bank, NA., through an agreement with the FDIC as receiver, representing $16.6 billion in total commitments.
Community Trust Bank Executive Vice President/Regional President Central Kentucky Billie J. Dollins oversees 21 branches in nine counties with deposits over $1.3 billion. She said one challenge is the continued environment of rising interest rates.
“We’re constantly looking at our products right now to determine what the best alternatives are for our customers and what’s attractive to our customers, especially on the deposit side,” she said.
Dollins said bank officials continue to watch the Fed for future hikes, while hoping a stabilized rate environment awaits in 2024.
Another challenge is staffing front-line employees and maintaining service expectations of customers. Leaders are continuously exploring new ways to improve recruiting efforts, she said.
CTB officials also work to stay up to date on mobile banking technologies while keeping in-person options a convenient option.
“We’re very much a community bank and we like our customers in front of us, but we understand the need for technology, especially for younger folks,” Dollins said.
Fifth Third Bank Kentucky Regional President Kim Halbauer said the bank has 69 financial centers across Kentucky, with $8.4 billion in deposits.
She said the bank’s leadership has been quick to see the opportunities in new technologies.
“That is why we have acquired companies like Provide, which assists healthcare professionals with financing for their practice, and Dividend, which is a nationwide leader in financing residential solar infrastructure,” she said. “These acquisitions help us prepare for the future ahead, embrace disruption, and accelerate speed-of-decision and speed-to-market so we are better able to serve our clients and be the one bank people most value and trust.”
She said bank CEO Tim Spence has shared his strategy for looking at geographic and growth trends in communities served and locating new centers accordingly.
“We reevaluate our strategy on an ongoing basis as we have new information to ensure our branches are positioned appropriately,” she said. “Visibility and easy access are important to our customers. Recent ribbon cuttings at our Next Gen Financial Centers at Tates Creek, Georgetown and Beaumont (branches) signal the continued investment Fifth Third Bank is making in the market.”
Financial institutions also serve as community partners to aid in a number of projects coming to fruition.
Commonwealth Credit Union officials announced earlier this year a pair of generous donations. The first was a $1 million gift to support the banking and finance program at Eastern Kentucky University. The second was a $2 million donation to help fund construction of Baptist Health Hamburg, scheduled to open next spring.
The donation to Baptist is the largest in the foundation’s history.
“We believe that health is the first step to wealth,” CCU President/CEO Karen Harbin said. “Our donation is a symbol of our commitment to bettering the lives of Kentuckians, and it’s one we know will have a lasting impact. Together, we’re making a difference—empowering the community through improved general health and financial wellness.”