Points West Community Bank will combine its state charters starting this month. The Fort Collins branch is shown here. BizWest File Photo

Customers drive merger of charters

Points West Community Bank is merging its Nebraska and Wyoming charters into its Colorado banking charter as of January 2020. The Windsor-based bank got its start in the early 1900s in Nebraska and bought its first bank in Julesburg in 1997. Since that time, Points West Community Bank has expanded to 23 locations in three states, including nine locations in Colorado.

It used to be fairly difficult to merge charters. Banks had to have charters for every state they operated in. That rule changed in the 1990s. According to the Federal Deposit Insurance Corp., 42 states restricted interstate combinations of banking charters in 1984 but by 1994 all states except Hawaii “allowed full interstate branching, which made possible the interstate consolidation of charters within banking companies.” Since that time, some banks have kept their separate charters and others have rushed to combine them. Points West combined its Wyoming charter into its Nebraska charter 13 years ago.

“Each location is different. Some people like to have multiple charters. To each their own. You run your household however you want to,” said Mark Brase, president of Points West Community Bank. “For us, by having one charter it means only one regulator. It is a little more complicated when you have multiple regulators, exams and audits.”

Regulators in all states ask similar questions, he added, so “if the culture and the model and the company and computer system can handle it, it makes sense for us to all be under one roof.”

Brase said that “it is more of an accounting and software and computer issue really. It’s not really changing anything we’ve done for the last 100 and some years. It is just some housekeeping items.”

By combining all of its charters into the Windsor location, anyone who banks with Points West will now be able to complete banking transactions at any Points West location in any state instead of the institution having to keep all of its operations separate.

Up until this change, customers coming from Pine Bluffs, Wyoming, a little over an hour away from Fort Collins, could not pop into the Fort Collins branch and cash a check.

“We have to turn them away and say sorry, it is just some of these banking rules and laws. It has become very confusing for customers. That will definitely ease that confusion and that pain with customers,” Brase said.

Amanda Averch, director of communications for the Colorado Bankers Association, said that the banking industry is “healthy and thriving in the state and customers’ needs are being well met and I think this is another example of a bank doing everything it can to make sure it is meeting its customer needs in a cost-effective manner.”

She said that it can get expensive complying with three different regulators in different states so to put them all on the same charter makes sense.

Points West isn’t alone in consolidating its bank charters. An FDIC report from 2012 said that “of the 15,432 banks (as opposed to banking organizations) that exited the industry between 1984 and 2011, 17 percent failed, 49 percent merged with an unaffiliated bank, and another 32 percent consolidated with other charters within their existing bank holding company.”

It added that intracompany consolidation of charters peaked between 1985 and 2000 at an average of 234 per year but leveled off between 2001 and 2011 to about 107 per year. More recent data is not available.

Points West purchased Signature Bank in 2011, which was based in Windsor. In 2017, Points West moved its charter from Julesburg to Windsor, which seemed to work better for the bank because most of the bank examiners and auditors come out of Denver and Windsor is only an hour drive away, Brase said.

Since the bank moved its headquarters to Windsor in 2000, it has looked for different ways to expand in markets that would make sense for its type of lending and culture and people, Brase said. Points West hadn’t expanded very much until recently.

“All of a sudden it seems like quite a few of the Wall Street type banks have been purchasing community banks and it has created some opportunities in the banking marketplace,” he said. “It has also opened up some bank locations and also there’s some really good bankers who have been displaced as well. It is a combination of all those forces.”

Points West and most of its bankers are from smaller communities so they understand Main Street, Brase said. Its specialty is really small- to medium-sized businesses that are up and down the main streets of the communities they serve.

“That seems to work very well. We understand their business and we want to partner with them,” Brase said.

Wall Street banks tend to focus on the larger businesses in an area.

“We just feel, as a community-size bank, that our niche is truly the heart of the community,” he said. “People still want service and it’s hard to find that same level of service when you take the big company approach. I think some of the larger companies certainly have the buying power but they may not have the local decision making or that extra touch when it comes to customer satisfaction.”

Currently, Points West has locations in Julesburg, Haxtun, Wellington, Loveland and Fort Collins. It has two branches each in Windsor and Greeley.

The bank hasn’t ruled out opening branches in other parts of Colorado but tends to head toward areas it might already be serving even if it doesn’t have a location there.

It takes customers in the prospective area as well as the right banking personnel for Points West to consider a location, Brase said.

As far as concerns in the banking industry right now, Brase said that it has been “a tough several years” for the agricultural communities it serves because of uncertainty in the commodity markets.

“We certainly have hope with some of the trade agreements and different things that our elected officials are working on that we’re hopeful will help the commodity markets, which will in turn help our rural communities,” he said.

Brase said that interest rates are at an all-time low, which means “there’s just not much of a margin to work with between what banks pay the depositors and what they charge the borrowers on the loans. So that’s a concern.”

Colorado continues to be a highly desirable place for people to live and work, which makes it attractive to outside banks, creating more competition “which can be a challenge but can also be an opportunity,” he said.

Points West Community Bank is merging its Nebraska and Wyoming charters into its Colorado banking charter as of January 2020. The Windsor-based bank got its start in the early 1900s in Nebraska and bought its first bank in Julesburg in 1997. Since that time, Points West Community Bank has expanded to 23 locations in three states, including nine locations in Colorado.

It used to be fairly difficult to merge charters. Banks had to have charters for every state they operated in. That rule changed in the 1990s. According to the Federal Deposit Insurance Corp., 42 states restricted interstate combinations of banking charters in 1984 but by 1994 all states except Hawaii “allowed full interstate branching, which made possible the interstate consolidation of charters within banking companies.” Since that time, some banks have kept their separate charters and others have rushed to combine them. Points West combined its Wyoming charter into its Nebraska charter 13 years ago.

“Each location is different. Some people like to have multiple charters. To each their own. You run your household however you want to,” said Mark Brase, president of Points West Community Bank. “For us, by having one charter it means only one regulator. It is a little more complicated when you have multiple regulators, exams and audits.”

Regulators in all states ask similar questions, he added, so “if the culture and the model and the company and computer system can handle it, it makes sense for us to…