Community bank model Key to local market

The Key Bank building in downtown Fort Collins is a constant in the Northern Colorado skyline, but Key is changing things up as far as its banking model goes.

Key is putting the finishing touches on a company-wide restructuring that is meant to look more like community banking than “big” banking. The changes at Key really went into effect last year, according to Jim Hitz, Key’s senior vice president and business banking sales leader for Colorado.

“We’ve implemented nationwide more of a community bank structure,” he explained. “We’re into 2007 now and it seems to be working very well.”

The new model means more local decision-making, according to Hitz. Under the new structure, Colorado is its own district under the leadership of Stuart Pattison, rather than its former status as a part of the Rocky Mountain region. Hitz explained that the change is recognition by holding company Keycorp that each market has its own special needs.

Other bankers in Northern Colorado understand that local bank customers prefer the community-banking model. With few exceptions, when national banks enter the market through acquisition of smaller, locally based banks, they experience some initial resistance.

Home Federal roots

Key is no exception. The bank entered the market through the 1993 acquisition of Home Federal Saving Bank – a deal that also landed them one of the tallest buildings in Northern Colorado. The following year, the bank acquired Rocky Mountain Bank and Trust Co. and The Bank of Greeley – a strong entry into Northern Colorado.

But in a market where new community banks pop up at a faster rate than they can be scooped up, Key had its work cut out for it. In 1994, Key had seven Northern Colorado branches and captured 7.62 percent of the deposit market share in Larimer and Weld counties with $201.5 million in deposits. After more than 10 years of intense local competition, Key’s market share in 2006 was 1.81 percent with $125.79 million in deposits.

Hitz said that Key is now stepping back to recognize the needs of local markets. He admits that national banks often have issues connecting with their communities after an acquisition.

‘Human connection’

“What they lose is that human connection,” he said, but added that Key still has some of its employees who worked with Home Federal.

Key’s new community banking model will move approval authority to local markets in some cases. For larger loans, decisions will be made in Denver, but all authority will remain in the state, Hitz said. The result should be an increased speed to market, but more important, Hitz points out, is that the decisions are being made by people who understand the local market.

What that means for Northern Colorado is an increased focus on business banking. Key recently hired Dave Nadeau as vice president and senior business banking relationship manager. Nadeau, previously at Home State Bank, will focus on business banking in Fort Collins and assist Chad Williams, another Key business banker, with covering the market north of the Denver metro area.

“What is exciting to me is that I’m put in a position to approach a person and find out what they need,” Nadeau said, explaining that Key has the resources to meet almost any need.

Growing team

For the Colorado district, Key actually increased its business banking team by 40 percent under the community bank model. But business banking isn’t the only area where Key is making some changes.

Since it entered the local market, Key has not opened any branches. In fact, it has actually gone from seven offices in 1994 to six now. Larry Costello, vice president and area retail leader for Northern Colorado, said that could change.

“We always have our eyes open for opportunities,” he said. “We are actively looking for opportunities to expand our footprint in the market.”

Business banking or retail banking – the company is betting that community banking is the key to penetrating the Northern Colorado market.

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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