But national trends raise eyebrows

The past year or so has left little room for complaint when it comes to examining the health of the Northern Colorado banking industry.
Deposits, assets and returns on average assets all remain strong, in most cases going up or fluctuating downward only slightly, according to a survey of the region’s banks conducted for The Business Report by Sheshunoff Information Services Inc. of Austin.
Deposits and assets increased at 29 of 35 locally chartered commercial banks surveyed, and employment increased at 22 of 35. Only one institution, FirstBank of Northern Colorado, posted a loss during the period studied. The survey provided annualized data through March 1996, with net income or loss figures applying to December 1995.
Many changes still are occurring in the industry, though, and some bankers caution that national trends such as high credit-card debt should cause consumers to reflect on the health of their own personal finances.
Additionally, there has not been a time in recent memory when so many banks were moving to new markets, branching and growing. That is likely to only intensify.
“The economy is robust, and the earnings of all banks are very healthy,´ said Dave Armstrong, president of the Fort Collins Area for Key Bank.
Indeed, that appears to be the general feeling among bankers in the region.
“We believe the opportunities for Weld County in 1997 will exceed the opportunities of 1996,´ said Jim Tuggle, president of Union Colony Bank in Greeley. “When the figures are in, the number of jobs in the primary sector in 1997 likely will be better than this year and 1995.”
The potential for new companies that will choose to locate in Weld County is greater than ever, he said. Tuggle added that employment figures in Weld County are growing at a rate of 19 percent to 20 percent, but that the population is increasing only about 2 percent.
“A lot of companies say they want to chose Fort Collins,” he said, “but it has its limitations. Weld County has a lot to offer these businesses.”
Tuggle’s bank posted total assets of $268.5 million in March 1996, compared with $227.5 million the previous year. Employment also shot up, to 152 from 120, according to Sheshunoff.
The economic health of the region is fueling what appears to be a new bank or branch in every neighborhood.
And next year, unlimited branching comes into play. As of Jan. 1, Colorado-based banking organizations with a charter can launch unlimited branching. By July, interstate banking becomes wide open, meaning an institution with no previous ties to the state can open a branch anywhere here.
“It could be unsettling,´ said Larry Meier, president of Poudre Valley Bank in Fort Collins. “We’ll continue to see a lot of competition. Everyone is expanding.”
However, he also notes that local banks have been positioning themselves to make it difficult for outsiders to find an empty street corner or under-served consumers.
In Fort Collins alone, several new banks have either recently entered or soon will enter the market, including Farmers Bank of Eaton and First Security Bank of Fort Lupton.
“The competition is welcome,´ said Key Bank’s Armstrong. “It’s a wake-up call to bankers to be on their toes.”
Key Bank Colorado appears to be on its toes. The bank posted total assets of almost $1.3 billion, compared withalmost $690 million in March 1995.
Other banks also posted strong numbers.
Farmers Bank, which scored the highest return on average assets – 2.43 – among locally chartered commercial banks in the Business Report survey, is quickly maturing.
“It’s continued to grow and do well,´ said Bill Farr, president of the bank. “Much of it has been from the Fort Collins area. That’s why we’re opening a facility there.”
Assets at Farmers Bank have grown about $7 million so far this year. That brings the total asset figure to approximately $30 million.
“We’re very fortunate to be located where we are,” Farr said. “There’s a lot of growth and small businesses. We’re in the right place at the right time.”
He suggested that one reason his banks – Eaton Bank also had an above-average ROA of 1.96 – do well is their small size and the personal service they offer.
Other local, independent banks fared well, also.
Poudre Valley Bank, part of FNB Inc. of Greeley, had an ROA of 2.18.
“We may see a slight softening in the next 12 months because of an oversupply of homes,´ said Poudre Valley Bank’s Meier. “But overall, the economic machine is in pretty good shape.”
He credits Federal Reserve chairman Alan Greenspan and the Fed with doing a good job of moderating interest rates, noting that there has not been any wild fluctuations in rates.
Also on a national note, Key Bank’s Armstrong worries about the high rate of credit-card delinquencies and how they recently have shot up. While Key Bank is a fairly large credit-card distributor, he said that the institution remains in good shape and is not plagued by delinquencies.
Still, Armstrong wonders why consumers don’t turn to banks and obtain loans at a much lower interest rate than most credit card houses charge.
“Most banks offer very competitive equity lines,” he said, noting that consumers can consolidate credit-card debt onto a lower-rate home equity line.
“But I guess too many people find it easy to take advantage of the many offers that come through the mail,” Armstrong said. “And, they don’t have the embarrassment of being turned down by a live person.”
Locally, delinquencies seem to be low enough so as to not concern bankers.
“There are a lot of credit-worthy people who spend a lot of their income, but we see low delinquency trends and low losses in Weld County,´ said Union Colony Bank’s Tuggle.Everywhere in the region, however, bankers are talking about the competition among different financial institutions.
“It’s keen,” Tuggle said. “It benefits consumers.”
“There’s a very high loan demand,´ said Farr of Eaton Bank and Farmers Bank. “You can never have too many of a good thing. Most of these banks are good and run clean-cut operations. It keeps everybody honest.”
Poudre Valley Bank’s Meier said he expects stiff competition in the industry to continue.
And everyone agrees that consumers are the ultimate winners in such a market. Rates and services are competitive, and product offerings typically are at their best while so many institutions attempt to lure customers.
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