Study, serendipity determine bank sites

In the year since the Colorado Legislature lifted restrictions on intrastate branch banking, state-chartered banks have opened 44 new branches, said Richard Fulkerson, state banking commissioner.That doesn˜t include locations that out-of-state holding companies converted to branch status after June 1997 when interstate branching restrictions were also removed, Fulkerson said.
Nor does it include convenience centers that have opened, such as automatic teller machines, because limited or partial banking centers are not branches per se, he explained.
"Legalistically speaking, a branch is any office location that accepts deposits and originates loans," Fulkerson said.
But while definitive regulations dictate the activities of a branch, nothing says that it must be stationary or built by conventional means.
So when Valley Bank and Trust opened Colorado˜s first mobile branch this month, it forged new roads in branching, so to speak.
Jim O˜Dell, president of the Brighton-based bank, said the new branch is a 38-foot motorized unit that will operate two days each week in Bennett and two in Strasburg.
"We were looking at the growth we expected to come into that area and the competition there. One bank has served that area for years and years. We felt like giving those communities one additional option," O˜Dell said.
The motorized unit was re-outfitted into a full-service, tightly secured, online bank. But even with the customized features, O˜Dell said, the new branch cost about one-fourth that of a conventional building.
A second, smaller motorized branch will go to senior housing projects as soon as routing is determined, O˜Dell said.
How a branch determines when and where to open — or dispatch — a new branch appears to vary from bank to bank, maybe even from circumstance to circumstance.
Serendipity seems to have played a role in 1993, after Centennial Bank Holdings Inc. purchased two Eaton-based banks, The Eaton Bank and Colorado Industrial Bank, now Farmers Bank.
Bill Farr, president of the holding company and of both Eaton-based banks, said it was only after the deal had closed that he and the other new owners were surprised to discover that 20 percent of The Eaton Bank˜s customers had Greeley ZIP codes.
"They were customers who preferred the small-town bank atmosphere and style, and they said we should come to Greeley," Farr said, and that˜s what the bank did.
Right away, the bank bought land "way out in the boondocks" of Greeley, at 47th Avenue and U.S. Highway 34, opened in a trailer and built a new $1.8 million, two-story structure along the lines of a Western lodge.
"Now, all four corners of the area are developing, and that branch has about $60 million in assets," or about 38 percent of Eaton Bank˜s total assets, Farr said.
A year later, Eaton Bank opened a second Greeley branch in the downtown area, this time in direct response to customer requests for a more-convenient downtown location, Farr said.
"We don˜t do costly market studies" in deciding where to open a branch, Farr said. "We know the territory better than most."
That said, Farr announced that the bank˜s next branch will be clear down in Del Camino, "one of the hottest spots in the state."
Farr said the new branch will open this spring in a trailer situated on land purchased along Colorado Highway 119, while the bank completes a new 8,000-square-foot building, probably in early 1999.
Sometimes, a bank won˜t reveal the details of how it decides on a branch location. Such is the case with Union Colony Bank˜s decision to branch onto Greeley˜s growing west side in January 1997.
Jim Tuggle, Union Colony president, would reveal only that the bank˜s approach was a "fairly scientific" one that involved a fair amount of research by a team of about 20 people from the bank.
Basically, "We look for locations where the future growth opportunity is sufficient to say that a branch would certainly exceed $50 million in deposits within five years," Tuggle said.
In this case, Union Colony thinks the west Greeley location is a winner because in less than a year, the branch reached $12 million in deposits, or "about 40 percent ahead of where we thought it would be," Tuggle said.
Union Colony also opened a small branch on the north side of Greeley in 1993, but Tuggle said it was closed in June 1997 because of insufficient growth, "probably because it was too close [about 15 blocks] to the main office.
"Sometimes you don˜t guess right," Tuggle said.
And sometimes, the closing of one bank˜s branch can lead to the opening of two other banks˜ branches.
That happened in Loveland, where, in less than a year, three different banks played musical chairs at the same location. In the end, Loveland gained a new bank presence.
It started in January 1997, when Union Colony transferred both of its Larimer County branches — one in Fort Collins and a second in Loveland — to First National Bank of Fort Collins, which, like Union Colony, is owned by First National Bank of Omaha.
The Fort Collins bank then merged its existing Loveland branch with the Union Colony branch, giving First National a net gain of one new branch, for a total of six branches in Larimer County.
"It was a marketing decision," Mark Driscoll, president of First National Bank of Fort Collins, said of the purchase. "We thought Union Colony should concentrate on Weld County and we should concentrate on Larimer."
But when First National moved its Loveland branch into a new 12,000-square-foot building in December 1997, it sold the old location to Northglenn-based Firstate Bank of Colorado.
That gave Firstate a second branch in Northern Colorado. It first came to the area in February 1997, when it purchased First Northern Savings Bank in Greeley, said Tim Weins, Firstate president.
Although Weins won˜t disclose exact dollar amounts, he said that, so far, Firstate has invested "several" million dollars to branch from metropolitan Denver into the more rural environments of Weld and Larimer counties.
Weins further revealed that soon, Firstate will announce plans to spend another million-plus "somewhere" in Northern Colorado.
"We don˜t find the [Northern Colorado] environment and philosophy different from [Firstate˜s] philosophy, because the heart of our organization sprouted from a rural environment," Weins said, referring to the fact that his family began in the banking business in 1963 in Kimball, Neb.
Key Bank Colorado is another bank that has the northern area in its long-range branching sights.
"We determine where to locate a branch based on two things: where it adds value to our customers and where the holes exist in our distribution network," said Chris Arnold, spokesman for the Cleveland, Ohio-based banking giant.
Any holes that exist in Key Bank˜s network of branches in Northern Colorado probably won˜t be filled during the next two years, Arnold said, despite the bank˜s recent announcement that it would build new branches and 150 to 160 new ATMs in a $10 million to $12 million statewide expansion.
However, Arnold said that "much of Northern Colorado" will be included among the new ATM locations, and, "I know there is some exploration going on there for branches" in the future.
Independent Bank of Kersey decides just "like any other business" where to branch, said Larry Neuschwanger, president.
"A bank has to have a certain amount of volume to make a profit," he said. "We look at the location on the basis of population and businesses, see if it˜s growing, and also at the long term."
Independent Bank began expanding in 1989 and, before January 1997, it had acquired six new locations: Greeley, Platteville, Sterling, Wiggins, Fort Lupton and Wellington.
Now all the locations have been made branches of the bank in Kersey, "and things are going well. Now we˜re just trying to take a deep breath after the marathon," Neuschwanger said.

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