LOVELAND — Northern Colorado bankers agree on several topics:
- Regulation rollbacks haven’t affected them much.
- Finding people to hire is affecting operations, just like nearly every other industry in the region.
- The industry remains strong but there are potential danger points.
While owning a building seems like something every successful business should do, that’s not always the case. For many companies, it makes more sense to continue leasing space, freeing up time and capital that can be better utilized in other ways.
Several bankers met at the BizWest CEO Roundtable on banking topics Tuesday morning at the HUB International conference room in east Loveland. HUB, Elevations Credit Union and EKS&H accounting firm sponsored the discussion.
Mark Kross, CEO of Verus Bank of Commerce, said that costs to comply with federal regulations does have an impact on bank rates of return, which have been reduced in the past few years to about 7 percent or 8 percent. And the regulations really haven’t declined, despite the posturing in Washington, D.C.
Byron Bateman, CEO of Cache Bank & Trust, an independent bank in Northern Colorado, said the Washington buzz hasn’t affected the folks in the trenches. “They’ve made a few adjustments, but the pure expense of staying up with these things is still there,” he said. “When I ask, ‘what are you doing to help us compete?’ I get no answer,” he said.
While that may be true, Kross said, “at least they’ve slowed down the rate of rolling out new stuff.”
Todd Marksberry, CEO of Canvas Credit Union in Northern Colorado, formerly Public Service Credit Union, agreed that little has changed. “We’re still contending with what the previous administration put in place. It’s fortunate they haven’t added new regulations,” he said.
Larry Wood, senior commercial banking manager and vice president of First National Bank, offered an historical perspective. Wood, who has been in banking for 40 years and will retire in a few months, said, “Some of this is just a cost of doing business. I remember sitting around a table like this in 1978 when we learned that we had to disclose APR rates. It was going to kill us, we thought. But now it’s handled as just a matter of course.”
Bateman, with 42 years in the banking business, said some of the regulations are good. “It impedes the multinationals who take advantage of every loophole,” he said.
Like virtually every other industry in the region, bankers complained about the inability to find qualified, experienced people to staff their operations. Luis Ramirez, market president and commercial banker with BBVA Compass bank, said his organization would like to hire additional commercial lenders but is having difficulty finding the right people. “We’re all fighting for the same people,” he said.
Paul Stanford, Northern Colorado president of CoBiz bank, said relationship management is where his company finds a gap in available talent. Saying past generations of bankers worked their way up in organizations, he said it seems that today there’s less desire to learn the business from the inside. “They want to move right up before learning the business,” he said. Replacing seasoned bankers who retire is a big issue for the industry.
Bateman said banks in earlier years could tap into pools of workers trained by the big banks, but now those banks are based someplace else.
Bryan Watkins, Northern Colorado market president for Elevations Credit Union, said that bankers need to get more on top of workplace trends. “More is being required of employers,” he said. “Employees want to work from home, have quality time off” and other benefits that traditionally bankers haven’t offered.
And the nature of the the banking job has also changed, Wood said. “Banking is moving toward providing a concierge to guide customers” through whatever process they need. Specialists will work behind the scenes to process loans or handle deposits, but customers will have one point of contact in a concierge — which changes the type of person banks need to hire.
Condition of the industry
The bankers believe that conditions are good for the industry right now, but all have encountered difficult economic conditions in the past and are wary of what could be coming.
None of the banks represented at the roundtable lend to the oil and gas industry, yet all benefit from a healthy energy sector. Bateman, who got his start in the oil state of Texas, said he sees oil and gas in Colorado as “maybe 12 or 13 years into the 20-year industry cycle.”
Oil and gas affects commercial activity and drives up land prices. Banks from the most local to the big national banks all chase commercial loans, which has an impact on rates and structures. “We’re all strong competitors,” Stanford said. “We’re all competing for the same loans, which can drive down interest rates and affect rates of return.”
Wood said competition can also affect the length of term of a loan. Best practices may suggest a shorter term, but a competitor may be offering a longer term. “Short term decisions can be made without remembering long-term impacts,” he said.
Bateman concurred. “We’ve got senior lenders who have never had to stress test,” he said. “We need to be cautious about the boom,” he added, citing industry wisdom about bank failures happening during the bust times because of decisions made in the boom times.
Within the commercial arena, bankers are experiencing most customer activity in residential, particularly multi-family residential. They said single-family residential construction is mostly financed by large national developers who have their own access to capital.
Ramirez said that lending for retail can be tricky. “Retail has to be Amazon-proof” before his bank is interested in lending, he said.
Wood said the demographics of who is borrowing has changed. Today’s borrower is mostly 60-plus in age and often is helping out sons and daughters who don’t have equity.
Watkins, like others at the table, was not overly concerned about an economic downturn. “Credit quality is always on our mind. We’re looking to make quality loans (regardless of economic conditions,)” he said.
Said Bateman, “If we’re consistent with our lending, we don’t have to worry about a downturn. It’s when you change your rules in order to drive more loans that you can get in trouble. I think there’s another good wave in this economy.”