Patty Gates: On the front lines in Weld County’s bank wars

When Patty Gates thinks back over the crisis that befell her industry in recent years, what bothers her most is the thought of those banks that didn’t survive and friends who lost their jobs as the institutions they loved crumbled.

A 28-year veteran of the banking industry, Gates is market manager at FMS Bank, which opened as a loan production office in Greeley last spring and then expanded into a full-service branch of FMS Bank, formerly Fort Morgan State Bank, headquartered in Morgan County.

Gates has seen a lot in her years in the business including the loss of 20,000 jobs in Colorado in the financial services sector between August 2006 and 2011. She also witnessed the closure of a number of banks over the same period, with six banks shuttered by regulators and sold in 2011 alone. Two of those banks, Signature Bank and Bank of Choice, were headquartered in Northern Colorado.

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A former executive VP at Bank of Choice, Gates knew many of the bankers affected by the purchase of the bank by Kansas City, Mo.- based Bank Midwest.

“The people who worked at those banks, they’re different people now,” she said.

She was working to launch the FMS Bank branch just as her former employer was sold last July to a bank with more assets and a better capital ratio.

Gates also worked at New Frontier Bank, from 2000 to 2003, but was long gone by the time regulators were liquidating that institution in 2009.

She has lifelong ties to the area, especially Greeley, where she graduated from Greeley Central High School.

Gates attempted to make her living in real estate before getting into banking as a consumer loan officer at Midland Federal Savings in 1984. At the time, she was divorced and her sons were 2 and 4.

Since then, her career has been about local banks, and preserving their quality.

In 1992, she helped to establish 1st Choice Bank, working to set up its real estate loan department.

1st Choice grew from its de novo stage to a $450 million bank, and was sold to Wells Fargo in 2000. At that time, Gates could have joined the Wells Fargo team, but had to stay true to her local bank roots.

“I’m just not a big-bank girl,” she said.

FMS Bank, which is celebrating its 30th year in 2012, opened its Greeley location with confidence in 2011.

“Additional regulations make it difficult to get into the mortgage business, and we’re already in the mortgage business,” FMS Bank CEO John Sneed told the Business Report last summer.

Sneed said Weld County was a good fit for the new branch because it is “a very good market,” with more homes per square mile than Morgan County, where the home office is located. He also said he expects Weld County to grow dramatically in the next five years.

Today, a troubled banking industry is hopefully a thing of the past for Gates, and she now is looking to 2012 and beyond with a measured degree of optimism.

“The past few years have been very difficult for people,” she said. “Community banks are truly a reflection of their customers. Many of us have watched our friends struggle and, too often, lose the battle to save their businesses and investments.

“I believe that Northern Colorado has seen many positive signs recently, and am hopeful that we are beginning to move down the road to recovery.”

Loan demand is picking up, Gates said, and not just in agricultural lending, at least as far as her bank in concerned.

(Agricultural loans, in fact, make up a relatively small percentage of the bank’s assets, seeing a 16 percent decrease in the fourth quarter compared to the same period in the previous year, according to the bank’s balance sheet. The bank carries about $3.5 million in agricultural loans, a small number for the agriculture-heavy Weld and Morgan counties.)

Gates sees other glimmers of hope moving into the year, including reduction of what was a flood of foreclosures to more of a slow-moving stream.

There are still properties being foreclosed upon, Gates said, and still non-performing assets on the books of banks across Northern Colorado, but things are headed in the right direction.

The most recent foreclosure statistics show not only marked decreases in foreclosure rates, but also decreases in the percentage of 90-day delinquencies, something that officials from the Colorado Bankers Association say is a sure sign of recovery.

At the same time, FMS – which has just one other branch, in Fort Morgan – has been growing.

As of Dec. 31, it held just over $92 million in assets, up from the $74 million in the same period a year earlier.

While its foray into Weld County has thus far been a successful one, there are no plans in the works to expand again, at least for now, according to Gates.

Like other banks and small businesses, FMS is cautious about the future, acknowledging that there are uncertainties in the economy, including both the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Patient Protection and Affordable Care Act.

No one is sure how these two titanic pieces of legislation will impact small businesses or banks, so those in charge say they must operate prudently until they know better how they’ll be affected.

Outside factors aside, FMS also hasn’t grown large enough to consider expanding at this time, Gates said.

“You have to reach a certain size before it makes sense to expand further, both from a financial and a regulatory standpoint” she said.

As of June 30, 2011, FMS Bank held nearly 15.5 percent of the deposit market share in Morgan County, ranking fourth out of 10 banks in the county.