We find ourselves in the middle of one of the greatest wealth transfer periods of all time. Those with wealth must decide whether they want to make transfers, and if they do, they must decide how much, to whom, when and in what structure?
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Six banks that are either based or at least do business in Northern Colorado have announced that they’re opening new branches within the last six months, and it has been well over a year since the last time a Northern Colorado bank was closed by regulators.
Warren Federal Credit Union is also expanding its presence in Colorado, opening its first full branch in Fort Collins next month.
That makes seven new branch openings associated with Northern Colorado in less than a year, and zero bank failures so far in 2012.
That’s your cue for a cheer, folks.
Last year, just two new branches were opened, and two banks were declared insolvent by the Division of Banking and purchased by other institutions in July 2011.
Even the bad news this year hasn’t been as bad as it was.
Until recently, Capital West National Bank was under a consent order with regulators, but as I wrote in my last banking column, new leadership and tighter lending rules led to conditions that released them from that order in June.
Loveland-based Advantage Bank is also operating under the watchful eye of regulators and has been doing so since 2009, but also since June, has been steadily improving with the launch of a shareholder offering last winter.
Larger Colorado banks such Guaranty Bank and Trust and FirstBank have announced multiple branch closures this year as they become leaner to deal with the new financial landscape.
At the same time, however, both of these banks have made moves to expand in other areas, with Guaranty purchasing the Denver-based investment firm Private Capital Management in August and FirstBank readying to open a branch in Glenwood Springs.
The most recent bank deposit numbers from the Federal Deposit Insurance Corp. are up, and at many institutions, so is lending, even if the increase is slight.
All of this boils down to a one thing: banking’s getting better, at least in Northern Colorado.
Amid all of this better news, there is something on the horizon that’s getting community bankers a little worked up.
Actually, make that a lot worked up.
Nationwide, 15,000 community bankers have signed a petition against something called Basel III, a set of rules aimed at alleviating uncertainty in markets across the globe. The regulations are the product of a brainstorming session involving central bankers and bank regulators in Basel, Switzerland, in September 2010.
The rules, which go into effect Jan. 1 and will then be phased in until 2019, were created with large international banks in mind. These banks are interconnected enough that when one takes a hit, the rest of the world’s financial system feels the pain.
To try and prevent trouble within these banking giants, international regulators agreed that banks would have to increase their Tier 1 capital, considering the strongest form of reserves, potentially by as much as four times, according to Morgan Stanley Smith Barney.
Sounds like a pretty good idea.
The worry though, on the part of the community bankers, is that all of these new requirements seem to be headed their way as well, even though the day-to-day goings-on at any of our community banks are unlikely to send shockwaves through the global financial system.
Instead of preventing a global meltdown, community bankers say, Basel III will prevent them from lending, which in turn will prevent small businesses from getting their start.
Northern Colorado-specific numbers aren’t available, but the Independent Community Bankers of America estimates that in Colorado, banks’ ability to lend would be cut by up to $3 billion.
One local bank has sent a letter directly to national regulators in an attempt to make its voice heard.
Loveland-based Home State Bank sent a letter last month to the head honchos at the Office of the Comptroller of the Currency, the Federal Reserve and the FDIC to outline some concerns about the impending Basel III.
Needless to say, Basel III includes a whole lot of complex financial-speak that I won’t try and translate for you, but some of the basic concerns are the decreased ability to lend, overly complex rules that will increase overhead costs and forcing small banks to take on more risk.
Now, I hear from a lot of bankers, and many of them have expressed concern over the regulations resulting of the Dodd-Frank Consumer Protection and Wall Street Reform Act, which are implemented by the FDIC and others.
But in this case, even Andrew Hoenig, director of the FDIC and the guy in charge of implementing the rules that so many community bankers already hate, is nervous about this Basel III thing, too.
Hoenig reportedly told a conference of the American Bankers that “international regulators should delay new global bank capital rules or the U.S. should reject the rules and rethink how capital standards for financial institutions are set.”
Sounds like rightful cause for concern in a still-recovering industry.
Molly Armbrister covers banking for the Business Report. She can be reached at 970- 232-3139, at email@example.com or at twitter.com/MArmbristerNCBR.