Region’s banks see vibrant growth

Big or small, experts say there’s room for all

Whether they’re big, small or somewhere in between, area banks have watched their assets and deposits grow ripe – some so ripe that national institutions have moved in to pluck them. Meanwhile, the crop of Northern Colorado community banks has grown healthy and strong.

The 49 banks with a presence in the Larimer-Weld region saw their assets increase by more than 19 percent from 1999 to 2000, according to Federal Deposit Insurance Corp. data. Total deposits increased more than 16 percent from $22.1 billion in 1999 to $25.7 billion this year.

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All that growth is consistent with what’s happening across the state and the country, said Richard Fulkerson, Colorado Division of Banking commissioner.

It takes all kinds

And all that growth means there’s room for players of all sizes in the local banking market.

“There is a very viable community banking structure in Colorado; which is serving a very defined market niche and doing very well,” Fulkerson said.

“Small organizations are growing until they reach a certain level where they’re an attractive target for large organizations; mergers and acquisitions are a function of the success of the industry and growth.”

The trend, said Jack Devereaux, president of The Home State Bank in Loveland, has been “the consolidation of smaller banks into larger banks this last year. I suppose that will continue.”

Take, for example, the acquisition of local banking giant 1st Choice Bank by Wells Fargo & Co. In February, Wells Fargo purchased 1st Choice Banks’ seven locations in Fort Collins, Loveland, Windsor and Greeley. At the time of merger, 1st Choice was one of the area’s preeminent community-owned banks with more than $420 million in assets. The change was official Sept. 22, when 1st Choice locations began bearing the Wells Fargo name.

The 1st Choice acquisition comes on the heels of a 1998 merger with Norwest Corp., which brought 120 Colorado banks into the Wells Fargo family.

Ken Zelie, Northern Colorado regional manager for Wells Fargo, said the 1st Choice move made sense because it allowed the San Francisco-based company to beef up its Colorado presence and gain locations along the booming Front Range.

It will likely beef up Wells Fargo’s assets and deposits, too, which grew respectively from $10.2 billion and $8.7 billion in 1999 to $13.1 billion and $10 billion in 2000. Those balances put Wells Fargo atop the local banking heap.

Wells Fargo isn’t the only company taking notice of the area’s potential. Not to be left out of the flourishing banking scene in Northern Colorado, Birmingham, Ala.-based Compass Bancshares acquired Northglenn-based FirsTier Bank, which saw its assets more than double from $355 million in 1999 to $790 million this year. FirsTier deposits increased from $307 million to $704 million.

Banks from other parts of the state also are striving to stake a claim along the Front Range. The holding company that owns First National Bank of Julesburg plans to open a bank in Windsor by spring 2001. Tom Olson Jr., a principal in the holding company that also owns banks in Nebraska and Wyoming, said a branch is a quicker, more cost-effective way than a new charter to enter the Windsor banking scene.

“Technically it will be a branch in Windsor, but realistically it’s not going to be anything close to a stereotypical branch,” Olson said.

The bank, which will be named First National Bank-Windsor and built at the corner of Main and 12th streets, will be run by local managers and will strive for a community feel, Olson said.

“We take pride in the fact that the people who are running the bank and making the decisions are the same people you see on the T-ball fields,” he said.

More than checking accounts

As big banks continue establishing their regional presence, they bring with them an economy of scale and convenience.

“We’re a big bank that tries to act small. When we do that, it relates to better service for our customers,” Zelie said. “They get the best of both worlds.”

The best of both worlds, Zelie said, is customer service combined with a broader product line that includes not only traditional banking services and automated access, but also investment, brokerage, leasing and mortgage services under the same roof.

Small to midsize banks also aim to offer the best and are trying, in varying degrees, to offer customers those same in-house conveniences.

Mark Driscoll, president of First National Bank in Fort Collins, said banks are losing customers’ “wallet share” to brokerage firms, insurance companies and the like, not to mention to those big banks that deliver such services in-house.

“We’re not the trusted financial adviser we would like to be,” he said. Regaining that status is one of the bank’s major goals in the coming year.

Even as those wallet shares are lost, First National is still seeing plenty of growth. The bank’s assets grew from $786 million in 1999 to $893 million in 2000; its deposits grew from $680 million to $764 million.

Tom Flanagan, president of Union Colony Bank in Greeley, said competition for dollars has gotten stiffer as mutual funds and stocks and bonds replace certificates of deposit in people’s retirement plans.

“There’s a lot of competitors for the deposits of individuals – there’s been this great shift of money,” Flanagan said. “We’re addressing that by offering our customers those same services. Historically, banks had put that money in CDs for customers, now they have the option of mutual funds and stock and bond purchases. That is a growing segment of our business. But it takes time for people to realize we’re a place for this money also.

Union Colony has fared well while trying to raise awareness of those other services it offers: Its assets swelled by 36 percent from 1999 to 2000, from $243 million to $331 million. Deposits were up to $247 million from $187 million.

Does size matter?

“I don’t think there’s any advantage to size, though larger banks like to lead people to believe that,” Devereaux said. “Smaller banks can offer the same things as larger banks.”

More importantly, Devereaux said, smaller banks can do it with a personal touch.

“Customers like to deal with somebody who’s been here for a while – they like the personal contact of smaller institutions,” he said.

A personal touch helped Home State’s assets grow from $140 million to $166 million and deposits from $127 million to $146 million in the past year.

Big or small, banks of all sizes have a role to play in community banking choices and have an impact on each other.

David G. Brewick, a principal of FiCap Strategic Partners Inc., a Denver and Pittsburgh-based company that advises banks and financial institutions, said consolidation can be good for bank customers. But with those consolidations, some customers may be pushed out and left without services, he said.

“I think that’s why some of the smaller startup banks are coming back in,” Brewick said. “There’s a spectrum of customers not being taken care of by regional banks. There’s room for many of these banks; many serve niche markets and do so successfully.”

Larry Seastrom, president of New Frontier Bank in Greeley, can testify that there’s room. Opened in 1998, New Frontier’s growth has outpaced projections on how much business it would garner. Owned by 300 local shareholders, New Frontier is the fastest-growing local bank in the region – it saw a 431 percent increase in assets from last year to this year.

New Frontier’s assets totaled $83 million this year, according to FDIC data.

“What has created our growth is being locally owned,” Seastrom said. “The local economy is strong, that’s obviously helped; consolidation has helped. ä Greeley and Weld County have really supported the locally owned banks.”

New Frontier’s success may serve as a model for others. The first to try to emulate New Frontier will be Advantage Bancorp Inc., which is opening locations in Greeley and Loveland.

Enough already?

The influx of new banks and new branches of existing banks begs the question: How many banks are too many banks?

Area bankers don’t have a definitive answer, but they say the region hasn’t reached that point yet.

“It’s an ongoing question,´ said Bill Farr, president of Centennial Bank of the West. With eight regional branches and more on the way, Centennial saw its assets climb from $247 million in 1999 to $401 million in 2000; deposits rose from $198 million to $347 million.

“People said we were over banked five years ago; we have twice as many banks as we did five years ago.”

“You certainly can’t say we’re over banked when we’ve tripled our projections in 18 months,” Seastrom said. “Larger multibank holding companies vs. smaller, locally owned – we both certainly serve a different niche, a different purpose. There’s room for all of us.”