Banks Remain Steady Despite Rising Interest Rates and Competition – BizWest
Mergers and acquisitions bring new entrants to the market
Northern Colorado continues to be a prime location for banks, despite the changing business environment due to the pandemic, rising inflation and rising interest rates.
The number of banks serving Boulder, Broomfield, Larimer and Weld counties has remained stable in recent years. There are 45 banks serving these northern Colorado counties in 2022, one fewer than in 2021, but the key players have remained mostly the same.
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JPMorgan Chase Bank is still the largest financial institution in the region with 31 locations, $6.01 billion in local deposits and a market share of 17.67%. Wells Fargo Bank has 24 local branches and local deposits of $5.7 billion, or 16.77% market share. Firstbank, headquartered in Colorado, has 17 branches in northern Colorado, one less than in 2021, with $4.18 billion in deposits accounting for 12.3% market share in the region.
When some of the larger banking institutions decide to close a site, the Colorado market is so strong that usually a new bank or credit union moves in to take its place. And that doesn’t necessarily mean branches full of bricks and mortar. Many banks are opening stand-alone ATMs or loan origination offices that only process loan applications.
Even with inflation and interest rates rising, “Colorado is a very attractive place for banks to be, and we’re seeing credit unions migrating massively to northern Colorado,” said Shawn Osthoff, president of the Bank of Colorado. “There is more and more competition every day. There are more banks moving into Colorado and moving into Colorado, so it continues to be difficult.
PNC Bank has seven locations in northern Colorado. It entered the market through its acquisition of BBVA USA in June 2021. HTLF Bank has three locations in northern Colorado and Mountain Valley Bank has two. Both institutions entered the market through acquisitions, HTLF from Citywide Banks of Colorado and Mountain Valley Bank through its acquisition of Cache Bank & Trust in late 2021.
Bank of Colorado has 15 branches in Boulder, Broomfield, Larimer and Weld counties and recently opened four branches in Arizona.
“We continue to seek to grow. We have opened a few LPOs [Loan Production Offices] in Colorado, in Boulder, and keep looking for things that make sense to us, common sense to the footprint, and the right people to run it. We will continue to look for opportunities to enter this market,” Osthoff said.
Denver has been a tremendous growth area for Bank of Colorado, which now has six branches there.
“We are looking to grow our presence in the Front Range and Denver metro in addition to Arizona,” Osthoff said.
Overall, Colorado banks are in great shape, he said. “Most are well capitalized and have posted good profits over the past five years.”
The good news is that the banks are ready to help with the financing. The “bad news is that a lot of banks have securities portfolios with big unrealized losses,” he said. “This unrealized loss does not harm the banks unless they are forced to sell securities.”
First Interstate Bank is one of northern Colorado’s newest banks. The Montana-based organization entered the Colorado market in February 2022 by acquiring Great Western Bank and its 20 locations in the state, including 13 in northern Colorado.
“Northern Colorado is a new market for First Interstate and one with a growing economy,” said Gail Grant, Mountain Desert Regional President for First Interstate Bank. “With all the filing movement we’ve seen in the industry this year, I think it’s a little too early to say exactly what impact the merger will have in the long term.”
She added that the banking sector had moved to fewer physical locations before the pandemic, but the pandemic has changed that.
“For drive-ups, we’ve built a number of locations that didn’t have them or moved to places that didn’t have them, as those have become incredibly important during the pandemic,” said Grant said. “I think going forward, the thought process has changed some. It has to be a mix of types of online digital access in addition to bricks and mortar.
Building community is important for regional banks. First Interstate dedicates 2% of its pretax net income annually to philanthropic efforts and hosts a company-wide Volunteer Day on the second Wednesday in September. The bank also launched a new grant campaign called “Believe in Local” where employees nominate local nonprofit organizations to receive a $25,000 grant from the First Interstate Foundation. Thrive-Transformation at Work in Lafayette was one of 40 organizations selected to receive the grant.
“We work hard to establish a good reputation centered on the communities and customers we serve,” Osthoff said. “I’m confident it will serve us well in the future.”
Bank of Colorado continues to find new ways to better serve its customers, including its ATM Live product which is an ATM that allows customers to press a button and chat with a live teller. There are 50 installed so far, offering extended hours beyond what banks offer.
“People like it. It does little more than an ATM, even if you don’t engage with a live cashier, it can still handle any Live ATM machine transaction that you might do in a bank,” he said. -he declares.
Bank of Colorado recently launched a product called Business Premium, which is a tool to help businesses manage their financial needs. This allows customers to take control of the things they need to go to the bank for, Osthoff said.
Many of these technological advances are due to the pandemic with “a decade of work all pushed back into a few years,” he said. “Customers started to adopt a technology that we didn’t think they would adopt for several years. The need arose and customers adapted quickly.