Banks hold steady amidst rising interest rates, competition
Mergers, acquisitions bring new entrants to market
Northern Colorado continues to be a desirable location for banks, despite the changing business environment due to the pandemic, rising inflation and interest rates.
The number of banks serving Boulder, Broomfield, Larimer and Weld counties has held steady for the past few years. There are 45 banks serving these Northern Colorado counties in 2022, one less than in 2021, but the main players have remained mostly the same.
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JPMorgan Chase Bank is still the largest financial institution in the area with 31 locations, $6.01 billion in deposits locally and a 17.67% market share. Wells Fargo Bank has 24 local branches and local deposits of $5.7 billion making up 16.77% of the market share. Firstbank, which is headquartered in Colorado, has 17 branches in Northern Colorado, one fewer than in 2021, with $4.18 billion in deposits making up 12.3% of the market share in the area.
When some of the larger banking institutions decide to shut down a location, Colorado’s market is so strong that usually a new bank or credit union will move in to take its place. And that doesn’t necessarily mean full brick-and-mortar branches. Many banks are opening up stand-alone ATMs or Loan Production Offices that only handle loan applications.
Even with rising inflation and interest rates, “Colorado is a very attractive place to be for banks, and we are seeing credit unions migrate into Northern Colorado in a big way,” said Shawn Osthoff, president of Bank of Colorado. “There is more and more competition every day. There are more banks moving to Colorado and establishing locations in Colorado, so it continues to be challenging.”
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 of Citywide Banks of Colorado, and Mountain Valley Bank through its acquisition of Cache Bank & Trust in late 2021.
Bank of Colorado has 15 locations in Boulder, Broomfield, Larimer and Weld counties and recently opened four locations in Arizona.
“We’re continuing to look at growing. We opened a couple of LPOs [Loan Production Offices] in Colorado, Boulder, and continue to look for things that make sense for us, good sense for the footprint and the right people to manage it. We will continue to look for opportunities to go in that market,” Osthoff said.
Denver has been a tremendous growth area for Bank of Colorado, which now has six branches there.
“We’re looking to grow our presence up and down 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 experienced good earnings over the last five years.”
The good news is that banks are ready to help with financing. The “bad news is that a lot of banks have security portfolios with big unrealized losses in them,” he said. “That unrealized loss doesn’t hurt banks unless they are forced to sell securities.”
First Interstate Bank is one of the newest banks in Northern Colorado. 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 deposit movement we’ve seen across the industry this year, I think it’s a little too early to tell exactly what impact the merger will have long-term.”
She added that the banking industry had been moving toward fewer brick-and-mortar locations prior to the pandemic, but the pandemic changed that.
“For drive-ups, we have built a number of locations that didn’t have those or moved into locations that didn’t, whereas those became incredibly important during the pandemic,” Grant said. “I think going forward the thought process has changed some. It needs to be a blend of online, digital types of access in addition to bricks and mortar.”
Building community is important to regional banks. First Interstate dedicates 2% of net income before taxes toward philanthropy efforts every year and hosts a companywide Volunteer Day on the second Wednesday of September. The bank also launched a new grant campaign called “Believe in Local” where employees nominate local nonprofits to receive a $25,000 grant from the First Interstate Foundation. Thrive-Transformation at Work in Lafayette was one of the 40 organizations selected to receive the grant.
“We work hard in establishing a good reputation centered around the communities and customers we serve,” Osthoff said. “I’m confident that 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 that is an ATM machine that allows customers to hit a button and engage with a live teller. There are 50 of those installed so far, offering expanded hours beyond what banks offer.
“People like it. It does quite a bit more than an ATM, even if you don’t engage with a live teller, it can still handle any transaction at the ATM Live machine that you could at a bank,” he said.
Bank of Colorado recently rolled out a product called Business Premium, which is a tool to help businesses manage their financial needs. It allows customers to take control of the things they need to go to the bank for, Osthoff said.
Many of these technological advances came about because of the pandemic with “a decade of work all pushed into a couple of years,” he said. “Customers started adopting technology we didn’t think they would for several years to come. The need presented itself and customers adapted quickly.”