Banking & Finance  September 29, 2006

WaMu to say goodbye to Weld Co. branches

Retail-style bank chain Washington Mutual will close four of its six Northern Colorado bank locations within the year as part of a companywide attempt to eliminate underperforming stores.

Company spokeswoman Missy Latham said that in addition to the previously reported closures in Weld County, WaMu will also close its Loveland branch and its Fort Collins branch at Cedarwood Plaza on South Taft Hill Road. The company plans to keep two branches in Fort Collins, one on East Magnolia Street and one on East Harmony Road.

Washington Mutual is closing all of its Greeley and Windsor branches.

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It made sense that Weld County was one of the top communities in the nation for bank branch growth last year, following its spot at No. 1 in the nation for population growth. So it follows that as the economy cools and Weld becomes tops in the nation for foreclosures that the county also loses a national bank.

“I think it’s a good indication that perhaps the banking industry in Greeley has reached its saturation point,´ said Union Colony Bank President Larry Wood.

Wood speculates that it was hard for WaMu to make a big impact in Weld County because it was a relative latecomer.

WaMu entered the Northern Colorado market in 2002 with offices at grocery-anchored shopping centers in Longmont, Loveland and Windsor. It followed with offices in Fort Collins and Greeley.

“Stores are evaluated based on three key criteria: household growth versus expectations; market density potential, and financial contribution to the overall network,” Latham said. “Similar to other fast-growing retailers, not every location we open ultimately meets our target performance goals.”

In Greeley, WaMu was nearly last in deposit market share last year with $1.6 million in deposits. Only Academy Bank had less. WaMu was doing better in Windsor and Loveland with more than $5.7 million and $6.8 million in deposits according to the Federal Deposit Insurance Corp.’s 2005 market share report.

Community banking struggle

It’s hard to imagine that a company that prides itself on not being “stodgy bankers” – according to its new television ad campaign – would not do well in Larimer and Weld counties. Many banks in Weld County take a more laid-back approach to banking than would been expected in, say, metro Denver. Employees are more likely to wear slacks and polos instead of suits and, sometimes, cowboy boots in the place of wingtips.

But perhaps it’s that level of competition that ran WaMu out of the region.

“I think they struggle in community banking,´ said Bill Kurtz, president of Wells Fargo’s Greeley market. “Outside of Wells Fargo, I think most national banks have a hard time with community banking.”

Wells Fargo has done well in Northern Colorado as a national bank competing with community banks. It had the second highest amount of deposits in Larimer and Weld counties as of June 30, 2005, the most recent figures available. Some of that success, Kurtz explains, has to do with the bank’s predecessors.

“Our roots go back to the very foundations of banking in Weld County,” he said.

Kurtz guesses that WaMu was challenged by both its national distribution power and its local presence. WaMu entered the market as a de novo bank – with a new charter rather than through an acquisition.

“To see them pull out was very surprising to me,” he said, explaining that it is unusual for a growth institution to back off of locations.

But the signs were there. WaMu announced it would enter the Northern Colorado market in 2002 with branches in Longmont, Loveland and Windsor. At that time a company representative indicated that while it would also branch into Fort Collins, Greeley was not in the short-term plans. Within two years, its Greeley branch opened.

The Northern Colorado branches are only a few of many branches that will be closed. At a Sept. 7 investor’s conference, James Corcoran, president of WaMu’s retail banking announced the company would close 80 stores within one year. Corcoran has only been with the company three months and was chosen for the position because of his expertise in operating efficiency, among other things.

From 2003 to 2005, WaMu opened 720 branches. The process of rapid expansion helped the company identify its key drivers.

“Household density has always been important to us, but through this journey it became vividly clear just how important it is,” he said in his presentation.

He explained that a number of branches do not meet the household density threshold. Rather than keep the struggling stores open, Corcoran said it is in the best interest of the company to close those locations and try to transfer accounts to better performing branches.

Consumers have choices

This will likely be a hard sell for consumers who have so many other choices. Greeley is home to 20 institutions operating about 35 branches, Windsor has 10 institutions operating one branch each and Loveland has 16 banks with 25 branches. Additionally, the markets continue to attract more banks.

The Home State Bank recently broke ground on its Windsor branch.

“Our location in Windsor is a defensive position more than anything,´ said Don Churchwell, CEO of Home State. “We have a number of good customers in Windsor.”

The office will be right off Interstate 25 and be the first jump to the east of the interstate for Home State. Home State also has a branch location planned directly south at Crossroads Boulevard.

The Windsor branch won’t be as big as some of Home State’s. Churchwell referred to it as a sort of “mini-branch.”

The move is telling of the market: In order to keep valued customers, Home State is branching. If the market weren’t so competitive, such strategies would not be likely. But Home State won’t be passive in the Windsor market.

“Obviously we wouldn’t go there without thinking about the opportunity it will afford us,” Churchwell said.

The key is that opportunity is still there and the established community banks are still seeing it. So while WaMu’s partial pullout of Northern Colorado might be indicative of a slowed economy in a competitive market, it is definitely not a glaring red light for the industry as a whole.

Retail-style bank chain Washington Mutual will close four of its six Northern Colorado bank locations within the year as part of a companywide attempt to eliminate underperforming stores.

Company spokeswoman Missy Latham said that in addition to the previously reported closures in Weld County, WaMu will also close its Loveland branch and its Fort Collins branch at Cedarwood Plaza on South Taft Hill Road. The company plans to keep two branches in Fort Collins, one on East Magnolia Street and one on East Harmony Road.

Washington Mutual is closing all of its Greeley and Windsor branches.

It made sense that Weld County was…

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