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Citing intense competition, Tower Bank is backing away from the Indianapolis market.
The Fort Wayne-based bank announced Monday that it is closing its Carmel loan production office, the third loan production office it has closed since the bank opened for business in February 1999.
Don Schenkel, parent company Tower Financial Corp.’s chairman, president and chief executive, wouldn’t rule out the possibility of expanding into the Indianapolis market in the future. But banks that have entered the market since Tower announced its plan in October and existing banks that have expanded their foothold have changed the market conditions, he said Monday in a telephone interview.
“I can’t specifically name players” that influenced the decision, Schenkel said. “Just like in Fort Wayne, we continually get new players in the market.”
Closer opportunities were also cited as a reason for the decision. But Schenkel said he isn’t allowed to talk yet about those possibilities because of federal rules that apply to publicly traded companies. Tower Financial shares trade on the Nasdaq stock exchange. At the end of trading Monday, shares closed at $15.05, down 8 cents.
Two of Tower’s local competitors – Star Financial Bank and Lake City Bank – said Monday they remain committed to growing their presence in the state’s capital.
“There’s no question that competition is keen down in Indianapolis,” Lake City Executive Vice President Kevin Deardorff said. But, he added, the market is growing so quickly that the opportunities are terrific. Lake City opened a one-man loan production office in Carmel about a year ago.
“We wouldn’t be in the market if we didn’t think it could make a major contribution to the bank,” he said.
According to Federal Deposit Insurance Corp. data, Hamilton County, where Carmel is located, saw 100 percent growth in deposits to almost $3 billion between June 2000 and June 2006. The area is the fastest growing in the state and one of the fastest growing in the country.
“And the projections are to increase at the same pace,” said Trois Hart, Star’s senior vice president of marketing. “That gets bankers interested.”
During the same six-year period, however, the number of financial institutions’ offices grew 53 percent, from 70 to 107. That’s the statistic that concerns Schenkel.
Tower would have had to spend an additional $15 million to continue with its original plan to expand into the market, the CEO said. He declined to say how much Tower has already spent on creating the loan production office.
Tower operates six full-service branches in Fort Wayne and one each in Angola and Warsaw. At one time, Tower also operated loan production offices in Huntington and Columbia City. Those have also been closed as the startup bank gets a feel for its market.
Warsaw-based Lake City has never closed a loan production office, Deardorff said.
Lake City, which operates more than 43 offices, has assets of $1.8 billion. Star, which operates 43 banking centers, has assets of more than $1.6 billion. As of Dec. 31, Tower reported $671 million in assets.
Two weeks ago, Fort Wayne-based Star announced plans to invest $3 million in a regional headquarters in northeast Indianapolis.
The office will house about 60 employees, including executive management, who will coordinate efforts of Star’s nine existing branches in the region and its four branches in the planning stages.
At the headquarters’ completion, Star will employ about 120 in the Indianapolis market alone. Tower employs about 180 total.
The four employees in Tower’s Carmel office have been hired by Indianapolis-based Symphony Bank.
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