A consistently conservative approach has helped make FirstBank Holding Co. Colorado’s largest homegrown banking group.
So why is cautious FirstBank literally putting its name in lights — on the marquee above the former Broomfield Event Center, now the 1stBank Center?
“We need to take more of a leadership role,” said president and CEO John Ikard. “We have been quiet; our culture has been to underplay things.”
Getting naming rights to a previously struggling venue is just one way Colorado’s “quiet” bank is taking a higher public profile.
During a tough year that forced some competitors to cut back on lending, FirstBank increased its loan portfolio 6 percent, pushing harder into commercial real estate.
But in its signature conservative style, the bank lends to business owners who occupy their own buildings rather than landlords dependent on hard-to-find tenants.
The bank was comfortable enough financially to donate $3.4 million to nonprofits in the state, disclosing a number it has kept under wraps in past years.
In 2009, when more than a third of Colorado banks lost money, all 25 FirstBanks in the state were profitable.
FirstBank Holding reported net income of $146.6 million, up 15 percent from 2008.
FirstBank Holding is the parent company of 26 subsidiaries. Twenty-five of those operate in the state as separately chartered banks — like FirstBank of Vail and FirstBank of Littleton — with 120 locations in Colorado.
The Financial Management Consulting Group recently ranked 133 Colorado banks based on performance. The FirstBank subsidiaries held 25 of the top 32 spots, including the first 14.
“Their business model made them appear awfully conservative during the robust times when everyone was seeing double-digit growth,” said Denver banking consultant Larry Martin.
But the bad times have confirmed the wisdom of that tested approach, he said.
FirstBank does face challenges, said Dave Baker, FirstBank’s chief operating officer.
Chief among them is the problem of being a big player in a smaller market.
Growth hard to achieve
In under two decades, FirstBank has grown from the state’s sixth-largest bank in deposits to second behind Wells Fargo.
With 120 locations in the state, doubling assets, now at $10.1 billion, in Colorado alone will be a challenge.
“We can’t have 200 locations in Colorado,” Ikard said.
Growth matters because employees, directors and other insiders control about 70 percent of the bank’s stock.
On one hand, management has a long-term outlook that won’t sacrifice safety for short-term growth, Ikard said.
But employee ownership also means the bank can’t stay stagnant or younger managers won’t stay around. A key to FirstBank’s success is longevity — Ikard and Baker have been at the bank nearly three decades.
That has pushed FirstBank to consider other markets where its model might work.
“We have 700,000 customers in Colorado. Let’s go do what we are good at in another place,” Baker said.
FirstBank expanded into Phoenix in 2007, gaining exposure to what ended up being one of the metro areas hardest hit by the housing market collapse.
But FirstBank entered the Phoenix market after the housing bubble had crested and with only eight locations and $100 million in deposits and loans, the bank suffered minimal damage, Baker said.
Higher profile doesn’t mean higher risk, Ikard and Baker emphasize, listing the ways in which the bank is cautious.
Playing it safe
FirstBank said no when the government offered TARP money because it didn’t need the money. And it doesn’t face any regulatory orders, which are becoming increasingly common across the country.
FirstBank doesn’t have any brokered deposits, the “hot” money from out-of-state customers that can quickly leave when better rates are offered elsewhere.
FirstBank does have about $2 billion in residential mortgages on its books, but last year it proactively modified $357 million of those mortgages.
By lowering the interest rate, the bank lowered payments for its customers, reducing the chances they will default and preventing them from defecting.
And customers who do fall behind can expect a visit in person instead of being directed to a toll-free number to call.
“Our loan officers will go out and talk to them and say, ‘Let’s try to figure this out,’ ” Baker said.
Even the naming-rights deal was done conservatively and with customers in mind.
“We can give our customers value — priority access to tickets,” he said.
Baker said FirstBank wouldn’t have put its name on the 6,000-seat center without the involvement of Anschutz Entertainment Group and Kroenke Sports Enterprises, who have converted the venue from a sports to music and entertainment focus.
They took over management of the Broomfield Event Center for the city of Broomfield after the previous manager wanted out.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
