Banks squeeze into Hamilton County

An old TV commercial for Union Federal Bank featured a neighborhood of homes adorned with bank signs. As the camera zoomed
out, banks appeared literally everywhere.

Hamilton County looks a lot like that these days.

At least 35 new bank branches have sprouted in the last three years, and more are on the way. Familiar names like Charter
One and Chase have added eight and seven branches, respectively. Other institutions including Tower Financial and Harris Bankcorp
are entering the market for the first time. And several banks are testing the water with loan production offices.

As banks clamor to do business in and around fast-growing Hamilton County, and branches pop up on just about every corner,
some industry observers are concerned the area is becoming over-banked, said Mike Renninger, principal of Renninger &
Associates LLC, a banking consulting firm based in Carmel.

But deposit figures show the county so far is supporting its more than 100 bank branches. Average deposits per branch have
remained steady as more locations have opened, Renninger said.

Many of the branches have opened near new residential developments. And the influx of banks has led to more competition for
customers–resulting in better service and more favorable rates, Renninger said.

"There are new players in the market, but overall the branch totals to serve the market growth are in line," he
said. "It seems like the county is over-banked, so to speak, but that doesn't mean more branches shouldn't be
built."

It's no wonder banks are beating a path to Hamilton County, considering its growth and its median household income near
$90,000. The county's population grew 38.6 percent from 2000 to 2006, reaching 253,000. That compares with 4.8-percent
growth for Indiana as a whole, data from Charlottesville, Va.-based SNL Financial shows.

Hamilton County already has 108 bank branches, a number that has more than doubled in 10 years, according to the Federal
Deposit Insurance Corp. And that doesn't even include banks such as Symphony Bank and Indiana Business Bank that have
opened offices on the northern edge of Marion County in hopes of capitalizing on the Hamilton County market.

To fight for a piece of the market, several banks have opened loan-production offices as a way to build a base of assets
before jumping in with a full-service branch. New Castle-based Ameriana Bancorp in December announced plans for a loan production
office in Hamilton County, and Shelbyville-based Blue River Bancshares announced plans for one in January.

Warsaw-based Lake City Bank opened a loan production office in July on Meridian Street north of Interstate 465. The bank,
which focuses on commercial lending, hasn't decided where to open its first branch but is looking for a location close
to its clients, many of whom do business in and around Hamilton County, said David M. Findlay, the bank's executive vice
president and chief financial officer.

Findlay isn't worried about the volume of banks entering the market. He's never heard of a metro area with a shortage
of banks.

"It's kind of like coffee shops," Findlay said. "There's not a dearth of coffee shops in Hamilton
County, but people keep building them."

SNL Financial, using data from California-based ESRI, estimates the county will grow another 30.2 percent in the next five
years, while the state grows 3.8 percent. Meanwhile, median household income in Hamilton–$88,155 in 2006–outpaces the state's
median by more than 70 percent.

As population and income grow, so do bank deposits. Overall deposits in the county grew 12.2 percent from 2004 to 2005 and
23.3 percent from 2005 to 2006, the SNL research shows. Hamilton County's branches have an average of $33 million each
in deposits.

The thriving central Indiana market was a big reason Chicago-based Harris Bank purchased Kokomo-based First National Bank
& Trust, said Peter McNitt, a vice chairman of Harris and head of business banking.

The $290 million acquisition closed in January, and 32 branches are slated to change to Harris in the next several months.
Three of the branches are in Hamilton County, and the bank is looking at opening more.

Harris isn't worried about competition, McNitt said. Hamilton County, with its 26 financial institutions, and Marion
County, with 72, are not quite Chicago.

"If you want to talk about a competitive market, we exist in maybe the most competitive market in the U.S., with almost
300 banks," McNitt said. "We are very used to competing in a competitive, crowded marketplace."

The executive who will lead Harris' business banking efforts in Indiana, Michael Wozniak, said Hamilton County has built
infrastructure and good schools necessary to support a variety of businesses.

The market also attracted Tower Bank of Central Indiana, a new, Carmel-based bank that will have financial backing and back-room
support from Tower Financial Corp., a Fort Wayne bank founded in 1999.

Tower is looking at three or four potential branch locations in the North Meridian corridor, said CEO William Olds, a longtime
local banker who left Fifth Third in March to take charge at Tower.

Olds said he expects competition could lead to a banking shakeout at some point.

"I think there's always a risk [of overbanking]," he said. "What it boils down to is who can deliver the
best service to the market niche they're going after."