By Molly Parker

CHARLESTON -- Just five years ago, Chip Coffee was enjoying a laid-back life in the resort community of Pawleys Island. Today, he is president and CEO of Tidelands Bank, a regional institution he started in Mount Pleasant in 2003.

“It drew me out of retirement,” he said of the burgeoning banking industry in the Lowcountry. “I saw the opportunity and it’s a fantastic opportunity.”

He was by no means the only one. 

Sometimes it seems as if a new bank is sprouting up daily in the greater Charleston region. While that’s not exactly the case, the area certainly has been inundated recently with financial institutions of every size, shape and market focus. Growth in population and business opportunities have drawn them, though some banking executives believe the market is oversaturated and that it’s only a matter of time before a wave of consolidation moves through the local industry.

As of June 30, 1996, the Charleston-North Charleston metropolitan area was home to 19 banking institutions with 145 offices. A decade later, those numbers had jumped up to 26 financial institutions with 175 offices, according to the Federal Deposit Insurance Corp.

Even more telling of the market strength is that bank deposits during that same period grew from $3.4 billion to $8 billion, a 135% increase. Most of the expansion has taken place in just the last five years. As of June 30, 2001, there had been a combined $4.6 billion in bank deposits among 21 institutions with 149 branches. 

“I think that free enterprise does work, and it will be survival of the fittest at the end of the day,” said Rick Saunders, president and CEO of Florence-based First Reliance Bank. His institution opened in 1999 and established branches in Charleston and Mount Pleasant in 2006. He is poised to build another branch in West Ashley later this year, which would be the third in this region.

“Those that can’t make it will consolidate,” he said, noting it’s unlikely any will go belly-up but will instead struggle to meet shareholder demands.  “Our plan is to make sure we do everything we can to stay in the game.”

The new-bank-on-every-corner phenomenon is being driven by the emergence of locally established de novo banks and by statewide banks headquartered elsewhere, which are either moving into the region for the first time or stepping up their presence here. SunTrust Bank, an Atlanta-based super-regional financial institution, also entered the market last year, building six branches in April 2006.

The national players, Wachovia Bank and Bank of America, still own the majority of the market, and also saw steady growth between 2001 and 2006, the last year for which complete federal data is available.

In 2001, Wachovia Bank had 18 offices in the region accounting for about $848,000 in deposits, compared to five years later when it had 25 offices and more than $2 million in deposits, making it the leading institution with over 25% of the market share as measured by deposits. Bank of America had 22 offices in 2001 and $789,633 in deposits compared to 2006, when the company had 21 offices with a combined $1.2 million worth of deposits. It is the area’s second-largest financial institution, claiming about 15% of the market share, the FDIC reports.

SunTrust Bank’s recent growth is not reflected in the last full-year report. The company has added five branches already this year and is planning another for November, company market President Mark Lattanzio said.

“I get asked all the time, on the street or by businessmen at a cocktail party, about how the market can sustain all these new banks,” he said.

Part of it has to do with the fact that people are flocking to the coast in droves. In 2000, the tri-county population was 549,033, compared to 2006, when it was 603,178, a 9% increase. With 150 branch offices in the area in 2000, that equaled one branch per every 3,660 residents. Six years later, 175 branches equaled one per every 3,446 residents.