Bombshell Deals, New Structures, Branches
by Glen Richardson
As the first quarter of the New Year gets underway bank mergers and new entries are solidifying Cherry Creek North as Colorado’s banking hub plus the district’s financial influence is rising within the region. In an article, nearly five years ago, the Chronicle (Oct. 2010) first reported the state’s financial hub was shifting to Cherry Creek North.
Growth of banking within the seven-block district plus the increase in number of top performing banks here has pegged the area for expansion. Just three years ago Bauer Financial considered nearly 27 percent of Colorado banks “troubled and problematic.” Today, just within Cherry Creek North there are a half-dozen banks getting five-star ratings from Bauer, and others aren’t far behind.
Three major banking deals feverishly crafted at the close of 2014 were being finalized in the first quarter of this year. On Jan. 16, however, parties to one big banking merger got cold feet and failed to seal the deal.
Big Bank Pact
The biggest and boldest change is the acquisition of Colorado’s only bank ranked in the Top 100 Best Performing Community Banks by SNL Financial. Cherry Creek-based Steele Street Bank was acquired by MidFirst Bank — one of the nation’s largest privately held banks — rated in the top five percent of all U.S. financial institutions for Bank Safety by IDC.
By combining the two financial giants under the MidFirst name, Steele Street — headquarters at 1st Ave. and Cook in Cherry Creek North — will be able to compete more effectively with larger banks now entering the Rocky Mountain market. Moreover Oklahoma City-based MidFirst will provide Valley locations with a broader array of products and services.
With other Valley Banking Centers located on South Colorado Blvd. at University Hills and downtown on 17th St., MidFirst’s trio of offices “will continue to offer customers a genuine community banking experience that emphasizes local decision-making, security and stability,” CEO Bob Malone stresses to the Chronicle. For further details on the transaction see Acquisition Of Steele Street By MidFirst Bank Packs Punch, at right below.
BofA Bear Hug
The second Valley banking bombshell was Bank of America’s opening of its first full-service branch in Colorado as the year closed at Fillmore Place on the northeast corner of 1st Ave. and Fillmore. The new venture marks the first time that the nation’s second-largest bank will serve retail customers in Colorado. In addition to the flagship Cherry Creek location, the bank is opening at least two additional retail branches within the state this year and is likely to expand further by opening other branches or acquiring other banks. Previously BofA operated a Creek location for commercial and business clients but never retail customers.
Bank of America made its first big entrance into the Colorado market in 2008 —during the height of the financial crisis — through the acquisitions of both Merrill Lynch and Countrywide Bank that had locations in Cherry Creek North. Countrywide’s location has since closed and Merrill Lynch has relocated into the Fillmore Place Banking Center. In June of last year FDIC ranked BofA as the 22nd largest bank in Colorado.
Nationally, Bank of America Corp. and the U.S. Justice Department are negotiating a settlement under which the bank would pay a major penalty for allegedly selling risky mortgage-backed securities that contributed to the 2007-08 financial crisis. The Justice Department reportedly is seeking a $17 billion settlement with the bank. At the end of 2014 the bank’s Countrywide Financial mortgage subsidiary was ordered to pay a nearly $1.3 billion penalty for a similar program that caused significant losses to government-backed mortgage finance agencies Fannie Mae and Freddie Mac.
Approval Seal Pulled
Lastly Denver-based First Western Financial (First Western Trust Bank & First Western Capital Management) signed a definitive agreement at year’s end to merge with Salina, Kansas-based Sunflower Financial (Sunflower Bank). Both banks have locations in Cherry Creek North. However, Sunflower Financial got cold feet and the two banks called off the deal.
Originally Scott Wylie, Chairman and CEO of Denver-based First Western, would have become Chairman and CEO of the combined bank and investment management subsidiary, as well as CEO and President of the holding company. Additionally, Denver would have been headquarters of the combined company.
Ironically, the deal was terminated the day after the Colorado Division of Banking had approved the merger. The combined company would have had approximately $2.5 billion in banking assets and $5.5 billion in trust and investment assets under management. “Although the original rationale for the merger had merit, the parties determined that terminating the merger was in the best interest of both companies and their respective shareholders,” the companies said a in joint statement issued on Jan. 16.
Sturm Staying Power
All of these developments were big news, but the fact Cherry Creek and other Colorado banks and credit unions are getting healthier is also influencing the district’s outlook. In addition to Steele Street, four other banks located or headquartered in Cherry Creek were on Bauer Financial’s top rated list. Not surprisingly, leading that list is Cherry Creek North headquartered ANB Bank, short for American National Bank.
The remarkable roots of Cherry Creek North banking go back to when Donald Sturm jumped into banking by purchasing five ailing banks including what was originally Cherry Creek National Bank. Now Sturm and his wife Susan run 33 banking centers located in Colorado, Wyoming and Kansas City from their Cherry Creek headquarters. The bank’s parent company, Sturm Financial Group, Inc., is also headquartered here and has financial strength embodied in over $2.3 billion in assets and ranks in the top 6% of banks nationwide by size. The bank has constantly achieved a Five-Star rating with Bauer Financial, the highest rating.
The Sturms’ philanthropic foundation gifts, when combined with the charitable endeavors of his companies, provide about $4 million a year to communities across five states. They have given money to fund charter schools, helped libraries, Children’s Hospital Colorado, Denver Art Museum and myriad charities. Other local banks on the top-performing list include Bank of Denver. CoBiz Bank and Guaranty Bank & Trust.
New Branches Opening
A newcomer to Cherry Creek, Alpine Bank — an employee-owned $2.4 billion-dollar organization — is scheduled to open its first Cherry Creek branch in the new Coors Foundation Building at 215 St. Paul on April 1. A year ago April, Alpine Bank opened its first Denver branch in the Union Station neighborhood’s IMA Building. Chartered in 1973, the bank’s headquarters are in Glenwood Springs, with 37 western and southwestern Colorado offices.
Building new digs in Cherry Creek North on East 1st Ave. is First Citizens Bank. The building now under construction at 3611 E. 1st Ave. is on the northeast corner of 1st Ave. and Monroe and will join a nest of neighborhood banks located on the east end of 1st Ave. near Colorado Blvd. First Citizens new bank is just west of Compass Bank and across 1st Ave. from Colorado State Bank & Trust and First National Bank. Heartland Bank and Young Americans Bank are also in proximity. The Raleigh, North Carolina-based bank initially opened a branch in Cherry Creek several years ago at 311 Steele St. under its IronStone Bank subsidiary name. That name was later converted to First Citizens. The new branch is expected to open near the end of the first quarter of this year and the Steele St. location will then be closed.
In addition to area banks, there are a dozen financial institutions with offices in Cherry Creek North. In addition to BofA’s Merrill Lynch, major firms include BNY Mellon Wealth Management, Cambiar Investors, Charles Schwab and Edward Jones. Also with a major presence here are Janus, MorganStanley SmithBarney, R.W. Baird and Scottrade.
Cherry Creek Becoming
Wall Street Of The West
Somewhat comparable to the eight block financial district in Lower Manhattan, Cherry Creek North’s seven-block district once known for its fashionable boutique shops is quickly becoming Denver and the Rocky Mountain West’s financial district. Cherry Creek is now home to 32 banks, many with their headquarters here. There are also a dozen major financial firms. Moreover, the east-west route running along 1st Ave. from University to Colorado Blvd. has become the district’s “banking row” with 15 banking locations.