Mega-mergers will spawn new signs to match times

All’s quiet on the community bank front when it comes to merger activity.

Northern Colorado’s cache of community banks continues to grow, but merger activity of late has been with the “big guys.”

Most recently, Compass Bank’s parent company, Compass Bancshares Inc., announced it entered into an agreement to be purchased by Spain-based Banco Bilbao Vizcaya Argentaria. The deal, valued at $9.6 billion, will result in a bank with $47 billion in total assets. Banco Bilbao currently operates Texas State Bank and Laredo National Bank in Texas, BBVA Bancomer USA in California and Banco Bilbao Vizcaya Argentaria in Puerto Rico.

A request for information regarding the impact of the merger of local markets was not returned in time for publication. The press release announcing the purchase indicated that Banco Bilbao intends to merge its U.S. banking affiliates with Compass.

The Compass deal isn’t closed yet, and so there is little information available about the local impact. However, another large deal has already been closed, even though there are few signs of the change, yet.

Wachovia debuts

By the end of the year, the signs at World Savings Bank’s branches in Fort Collins and Greeley will read Wachovia. The company operating the nation’s fourth largest bank closed on the deal to purchase Golden West Financial Corp., holding company for World Savings, in October.  Charlotte, N.C.-based Wachovia has more than $518 billion in assets.

Wachovia spokesman Joe Stroop said that the company will complete the banking integration sometime in the fourth quarter, most likely in the fall. And there will be some changes in store.

“World Savings chose a business model that has been incredibly successful for them,” Stroop said. “They chose to have a limited product set for their customers.”

The bank, with 35 branches in the state including two in Northern Colorado, held the third largest amount of deposits in Colorado as of the June 30 deposit market share report from the Federal Deposit Insurance Corp. Its more than $5 billion in deposits accounted for 6.62 percent of the market.

 World Saving’s single Fort Collins branch still made it in the top 10 for Larimer County’s deposit market share. The bank had $141.7 million in deposits, or 3.58 percent of the market share, putting it at No. 8.

The bank wasn’t as aggressive in Weld County, where it also operates one branch. It ranked No. 12 in market share with $68.8 million in deposits and 2.3 percent of the market share.

Stroop explained that World Savings business model called for a limited number of services so that it could focus on two keys – very competitive certificate of deposit rates and a “strong, safely-run” option adjustable rate mortgage.

ARM liability

Stroop said that the negative publicity surrounding option ARMs did not extend to World Savings. He explained that the bank’s loan officers where very careful to explain the product and were in contact with ARM customers on an almost-monthly basis to ensure there were few problems.

Foreclosure data from the county clerks’ office, from Feb. 14 thru Feb. 27 World Savings held none of the 92 new foreclosures in Larimer and Weld. Stroop added that World Savings solid ARM portfolio was one of the reasons it was an acquisition target.

Wachovia’s banking model is still highly focused on retail services – such as certificates of deposit – but it varies from World Savings.  Wachovia offers a full range of banking services – from loans to small, medium and large businesses to wealth management. Its branches even include representatives from Wachovia’s investment firm.

To meet its goal of being a retail-oriented bank, Wachovia plans to add ATM’s and drive-up banking windows where appropriate.

Three ‘L’ words

But being a retail bank in today’s banking market means more than having a drive up. It’s about location, location, location. World Savings’ branches are in good locations in Northern Colorado – on East Harmony Road in Fort Collins and where 11th Avenue meets 11th Street in Greeley. However, Wachovia’s model is one driven by convenience.

“When a bank customers say convenience, they mean a bank branch near where they live, near where they work and near where they relax,” Stroop said.

Wachovia entered the Texas market, where Stroop is based, in 2004. Starting from scratch, the bank now has 165 branches in the state.

Stroop couldn’t share any detailed plans about Wachovia’s plans in Colorado, since the company is still ironing them out. Shortly after closing on the World Savings deal, Wachovia announced plans to shutter around 200 branches. It added, however, that it would focus its efforts on the growth markets in California, Texas and the Southwest.

Kristen Bastian covers banking for the Northern Colorado Business Report. She can be reached by phone at (970) 221-5400, ext. 219, or by e-mail at [email protected].

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