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?
First-quarter results from 15 area banks provide further evidence that the banking sector is recovering, slowly but surely, according to call reports and uniform bank performance reports from the Federal Deposit Insurance Corp.
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Banks that have increased their total assets from first-quarter 2010 to first-quarter 2011 just slightly outnumbered those that didn’t, brightening the glimmer of hope surrounding the industry recently.
Nine area banks have increased their total year-over-year assets, while call reports show six decreasing their year-over-year numbers.
Acting Colorado Banking Commissioner Fred Joseph said that he saw some improvement in the 80 state-chartered banks overseen by the Colorado Division of Banking, but that some of the changes could be attributed to a particular bank’s business model.
“But I am seeing some general improvement in the economy, and some improvement in portfolios,” Joseph said.
This improvement, however gradual, is due in part to more real estate being sold, and more commercial and single-family loans being made, he said.
For banks, according to Joseph, the key to continued success lies in diverse portfolios.
“Regulators and banks have become more sensitive to the issue of concentration and diversification,” he said.
Gail Grant, group president of Great Western Bank, also said that portfolio diversification is meaningful to a bank’s growth in the current economy.
Great Western, one of the nine banks to increase its year-over-year numbers, moved from total assets of $840 million in first-quarter 2010 to $925 million in the same quarter this year, according to the FDIC.
Grant said Great Western has had a lot of success and is seeing new loans in areas such as commercial and industrial real estate, as well as agribusiness. She added that the fact that the bank is well capitalized is important for increasing total assets, as it improves the bank’s ability to loan money.
Actively looking for new customers is another piece of the puzzle, according to New West Bank chairman Leroy Leavitt. Leavitt said that while his bank is out actively looking for commercial loans, it had a diversified portfolio before the recession, which allowed it to remain strong.
Leavitt said that 30 percent of the loans at New West come from agriculture production and real estate, and 30 percent come from commercial business. The remainder is a mix between commercial real estate and consumer loans.
New West Bank, located in Eaton, increased its total assets from $147 million in first-quarter 2010 to $149 million in first-quarter 2011. Leavitt said that there is modest loan demand in the market right now, which is allowing his bank to gain new customers.
Some of the first-quarter growth is seasonal, Leavitt said, with advance payments often being made at the beginning of the year.
First National Bank saw growth in deposits rather than loans, according to president Mark Driscoll. Deposits have been strong, said Driscoll, but the bank is also working on loan diversification and calling on customers to develop its business.
First National grew its total assets from $11.4 billion in first-quarter 2010 to $13.1 billion in first-quarter 2011. Driscoll also noted that some of the growth in the area can be attributed to consolidations and mergers. First National consolidated four charters into one in September.
Molly Armbrister covers the banking industry for the Northern Colorado Business Report. She can be reached at 970-221-5400, ext. 209 or email@example.com.