Merger brings trust bank to region

FORT COLLINS — Newly chartered First Western Trust Bank of Denver plans to merge with two Fort Collins companies — Poudre River Valley Trust Co. and James Sprout & Associates — in a deal that’s scheduled to close next month.

The merger, which will create First Western Trust Bank-Fort Collins, gives instant market clout in Northern Colorado for the new operation, which just received the blessing of the Federal Deposit Insurance Corp. last month.

Poudre River Valley Trust and James Sprout & Assoc., both headed by Jim Sprout, bring about $140 million in combined assets under management to the merger. Furthermore, Sprout — in business in Fort Collins since 1978 — will stay on as chairman of the Fort Collins operation. The company plans to hire a new Fort Collins president.

The value of the transaction was not disclosed.

First Western Trust, owned by First Pioneer Holding Inc., is the brainchild of partners Scott Wylie and Warren Olsen, who each have records of success in the financial industry.

Wylie started Bank & Trust of Puerto Rico in 1988 before selling it to First Boston Corp. in 1993. Next he formed Trust Bank of Colorado in 1996, which he later sold to Chicago-based Northern Trust. Wylie stayed with Northern Trust as CEO of its Colorado operations until 2002. By the time he left, Northern Trust in Colorado was managing $443 million in assets.

Olsen, a Denver native, is known for starting Morgan Stanley’s mutual fund program, which he built to $35 billion in assets over 70 funds. Most recently he was president and CEO of IBJ Whitehall Asset Management Group.

The track records gave Wylie and Olsen a running start to hatch another trust bank. They set out to raise $10 million in seed money for First Pioneer Holding Inc. and ended up with $21 million from about 80 investors.

Trust banks differ from standard retail banks because they focus on wealth management services to high net-worth clients. First Western will offer loan and deposit services, but not in a retail setting. The company model targets households with at least $1 million in assets, a category that’s growing rapidly in Northern Colorado, Wylie said.

He cited research that showed Larimer County was the second fastest-growing county in Colorado for the “wealth demographic.”

“We started looking nine months ago,” Wylie said about his interest in the Northern Colorado market. “What we’ve learned over and over is there was a good opportunity for a wealth management approach.”

Poudre River Valley Trust is the only independent trust operation in the region. Otherwise, trust services in Northern Colorado are available as divisions of banks.

Trust services and private banking for wealthy clients have become profit engines for large banking companies, according to Ron Phillips, a Colorado State University professor who specializes in banking issues.

“Financial institutions can do more, and people are looking for that financial advice and management,” Phillips said.

And the market for wealth management is growing nationally, largely due to the prosperous baby boom generation. A report by San Diego-based marketing firm Claritas Inc. showed that baby boomers with more than $1 million in investable assets was expected to grow annually by 9.3 percent between 2001 and 2006.

Northern Trust launched expansion plans in 2001 to add 18 offices in three years. Wilmington Trust announced last year it would start a division to serve clients with $25 million of investable assets.

What remains to be seen is if there’s enough of a “wealth demographic” for all the players, and if small firms can win over customers with claims of service before size.

Wylie has marketed the First Western model as the first “Western-based investment and trust company,” which he said stands out in a field that’s dominated by Eastern trust companies.

As planned, First Western will include private banking, trust services, investment management and a category of service called “family office,” which includes risk assessment, philanthropic support and back office support.

The First Western identity should be adopted in Fort Collins in “two or three months,” Sprout said. Meanwhile, he plans to form a local advisory board to help run the local operation.

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