December 24, 2004

Mergers, expansions to influence bank moves in ?05

After a year of growth and prosperity, things are still looking bright for banking in Northern Colorado, according to industry executives.
With the number of mergers, acquisitions and expansions over the past year, 2005 will be a year to see how rapid growth will play out in a region with comparatively slow economic growth in other sectors.
Overall, the feeling is optimistic for continued strength in banking.
?Things look very positive for next year,? said Richard Fulkerson, the Colorado banking commissioner.
Fulkerson expects merger and acquisition activity to continue across the region and further consolidate the industry. But competition will still be fierce, driving deposit and loan levels.
Fulkerson is amazed that there are no signs of slowing for the industry in Northern Colorado. Despite competition that nears market saturation in some minds, there is still interest in new charters for Northern Colorado, he said. People are betting on growth of the Interstate 25 and want to be a part of it, he said.
?Banks have to steal from one another to grow,? said Larry Wood, president of Union Colony Bank. ?We?re all just stealing from one another because the economy is not growing as fast as the banks,? he said.
Because of the competitive environment, finding a niche is becoming increasingly important. Wood wouldn?t give away all of his secrets, but sees several industries strengthening, which gives him optimism about the coming year. He hopes to see an agricultural recovery with increased precipitation and is watching the new companies roll into Weld County, such as the Owens-Illinois Inc. bottle manufacturing plant, and two new ethanol production plants.
Banks are not only growing more quickly than the local market, but they are also outpacing the capacity of the labor pool.
?The number of quality candidates is lower now than it has been for many years,? said John Busby, branch president of Horizon Bank in Loveland. ?I think it?s a good time to be a banker in Northern Colorado.?
The lack of qualified people will drive up the cost of labor as banks compete for employees. When salary offers top out, bankers will look at the corporate culture of a bank to make employment decisions.
Lack of professional training is at the root of the labor issues for the banking industry.
?I don?t think, as an industry, we?ve done very well in that arena for the past six or seven years,? Busby said of training employees.
Busby contends that success, especially for de novo banks, hinges on hiring a knowledgeable and talented staff.
The Colorado Bankers Association is looking to partner with the American Institute of Banking to offer more training options in the state. The goal is to bring younger bankers into formal training earlier in their careers, according to Byron Bateman, president and CEO of Cache Bank and Trust.
Bateman sits on the CBA?s government affairs committee. He said for the next year the CBA will focus on dealing with TABOR and Amendment 23 and their impacts on the state budget. The association?s stance is that these items must be reformed to allow for communities to flourish economically. Bateman said the largest worry is funding for higher education ? Colorado State University and the University of Northern Colorado in his case.
As far as legislation is concerned, Banking Commissioner Fulkerson expects 2005 to bring more attempts to address identity theft and fraud. He said the difficulty is creating a safe financial environment but not limiting customer convenience and freedom.
Local bankers mirror Fulkerson?s assessment of continued growth activity in the region.
?The Northern Colorado market draws a lot of interest,? Bateman said, adding that he received several calls this year from ?interested parties.?
He feels the acquisition activity will remain strong throughout next year and into 2006.
?We?re probably getting close to being overbuilt in the area,? said Darrel McAllister, CEO of Bank of Choice. But that won?t stop McAllister, or any other ambitious businessperson from expanding. Bank of Choice already broke ground on two new branches ? one in Fort Collins and one in Windsor.
?My overall strategic plan is to be a Northern Colorado bank,? he said, which means adding branches to serve all of the towns and cities in the region.
McAllister, like most local bankers, knows that competition in the region is driving down available profits. And, like most, he is not too worried. He expects 2005 to be a profitable year for Bank of Choice, even with the investment into new branches.
Nationally, interest rates are on the rise. Things are starting to return to pre-9/11 regularity. While the financial situation could return to what it once was, the banking situation in Northern Colorado is forever changed each year. Next year?s activities and successes or failures in the region could set a model for the industry.
Bankers are left to wait and see if growing pains subside or become more tender.

After a year of growth and prosperity, things are still looking bright for banking in Northern Colorado, according to industry executives.
With the number of mergers, acquisitions and expansions over the past year, 2005 will be a year to see how rapid growth will play out in a region with comparatively slow economic growth in other sectors.
Overall, the feeling is optimistic for continued strength in banking.
?Things look very positive for next year,? said Richard Fulkerson, the Colorado banking commissioner.
Fulkerson expects merger and acquisition activity to continue across the region and further consolidate the industry. But…

Christopher Wood
Christopher Wood is editor and publisher of BizWest, a regional business journal covering Boulder, Broomfield, Larimer and Weld counties. Wood co-founded the Northern Colorado Business Report in 1995 and served as publisher of the Boulder County Business Report until the two publications were merged to form BizWest in 2014. From 1990 to 1995, Wood served as reporter and managing editor of the Denver Business Journal. He is a Marine Corps veteran and a graduate of the University of Colorado Boulder. He has won numerous awards from the Colorado Press Association, Society of Professional Journalists and the Alliance of Area Business Publishers.
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