Psst! How about an investment vehicle with that?

For several years, banks in Northern Colorado have offered products not normally associated with banks, including a full range of insurance and investment services.

But many of those banks still consider those products their best-kept secrets, even the larger nationwide banks such as Wells Fargo.

“Many people still think of us as just a bank,´ said Cristie Drumm, vice president of corporate communications for Wells Fargo in Colorado. “They don’t know we offer anything else.”

Federal legislation in 1999 permitted banks to enter the insurance and securities businesses, industries that had until then been off limits.

Banks offer nontraditional products to make money on fee-based services and because conventional wisdom says consumers want one-stop shopping. The idea is that people would rather have one place than many to deposit their money, pay their insurance premiums and take care of their investments.

About three years ago, Bank of Colorado bought Linden, Bartels & Noe, a Northern Colorado-based insurance company. Five years ago, the bank started partnering with Raymond James Financial to offer investment services.

The bank, with branches across Northern Colorado including Fort Collins, Windsor, Greeley and Fort Lupton, got into insurance and investments to compete with other banks, said Cody Fullmer, branch manager for Fort Collins.

“Banks have been pushed into the one-stop shopping concept,” Fullmer said. “The idea is that the more products you offer, the less likely a customer will want to leave.”

Fullmer added that insurance has been a successful venture for his bank, but he’s still waiting for the investments, which make up 2 to 3 percent of the bank’s total business, to show the same success.

“Part of it is that we started the investments five years ago when the stock market wasn’t doing very well,” he said. “But as things improve, the investments will do better.”

Traditional thinking

Some banks don’t offer nontraditional products because executives believe financial institutions do better when they concentrate on what they do best – banking.

“We are the minority in this, but we don’t think banks do customers a service when they get into insurance and other things,´ said Pat Brady, president of 1st Banks of Northern Colorado, with branches in Fort Collins, Greeley and Loveland. “Most people think customers want one-stop shopping, but I’m not sure they do.”

Wal-Mart might prove Brady wrong, but he points to other examples of businesses diversifying their products.

“Starbucks sells sandwiches,” he said. “You see grocery stores selling TVs. But do most people go to a grocery store to buy a TV? I don’t think most people want to buy insurance through a bank.”

Eaton-based Centennial Bank of the West also doesn’t offer nontraditional products. “We have decided to take a very traditional path, and we have chosen to do what we do best, which is banking,´ said Nancy Teksen of Centennial Bank of the West’s corporate marketing department.

Secure income stream

Some banks have been successful in offering nontraditional products. First National Bank manages $1 billion in investments, said Kurt Spieler, chief investment officer for First National Bank in Fort Collins.

Owned by First National Bank of Nebraska, First National Bank of Fort Collins also manages investments for its sister institutions, Union Colony Bank in Greeley and First National Bank in Loveland. First National in Fort Collins employs seven people who work exclusively with investments.

Spieler said the bank’s primary purpose in managing investments isn’t so much the one-stop shopping concept. It’s to take advantage of fee-based services. Most consumer banking services such as checking accounts are free, so banks have to find other ways to make money.

“Fee-based services provide a secure income stream,” Spieler said. “They aren’t dependent on deposits or loans.”

Health care and real estate?

Some banks are also delving into other nontraditional products. Wells Fargo offers health savings accounts through two health-care plans in Colorado, Rocky Mountain Health Plan and Kaiser.

Health savings accounts became available in January 2004 through the Medicare Modernization Act passed by Congress. They allow people who purchase high-deductible insurance policies to establish tax-free savings accounts for health-care expenses.

So far, only a few banks nationwide offer them, and not to just any customer who walks through the door. To get a health savings account through Wells Fargo in Colorado, individuals have to work for companies that purchase health plans from Rocky Mountain Health Plan or Kaiser.

The next frontier in nontraditional bank products may be real estate brokerage.

Banks wanted to enter real estate along with insurance and securities in 1999. Congress left the decision to federal banking regulators. About a year later, regulators proposed a rule that would allow banks to enter real estate brokerage and management.

Real estate agents opposed the idea, and every year since, the real estate industry has gotten the appropriation for the proposal blocked, so there has been no money to implement it.

In May, Reps. Michael G. Oxley (R-Ohio) and Barney Frank (D-Mass.) proposed legislation that would permit banks to enter the real estate business. A competing bill, which would bar banks from entering the real estate brokerage business, has 240 co-sponsors.

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