Routt County bank officials report positive outlook
After loan, market challenges and low ratings several institutions say worst is behind them
April 14, 2011
Steamboat Springs — Leaders of several banks with Routt County branches said this week that despite troubling ratings from two financial research companies, the worst is behind them and profits are returning.
"2010, the most recent reporting information that rating agencies have, was the worst year in the 107-year history of this bank," said Pete Waller, president and CEO of First National Bank of the Rockies. "It was due largely to our exposure to construction and development lending. That's the kind of loans that were in high demand in our markets, primarily, in Mesa County and in Routt County."
First National Bank of the Rockies is headquartered in Grand Junction and has 10 branches in Northwest Colorado, including Steamboat Springs, Hayden, Oak Creek and Craig.
Waller didn't sugarcoat poor ratings given to First National — and others — by Weiss Ratings and BauerFinancial, Florida-based companies that rate thousands of financial institutions on numerous criteria.
First National, for example, received a D- from Weiss and two out of five stars from Bauer. But Waller noted that the ratings look at a bank's performance primarily from the rearview mirror. He said First National has a much better view out of the windshield.
Waller said Wednesday that after mitigating losses, maintaining capital and working through loans that declined in value as real estate markets plunged, First National is "essentially looking at a break-even year" in 2011. The bank could see profits return in 2012, he said.
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"We still have more than adequate collateral; we're still in this for the long run," Waller said. "Despite the ratings, the bank is still in very good shape from the standpoint of weathering this storm."
That was the prevailing sentiment expressed by leaders of several banks with branches or main offices in Routt County, indicating positive signs for a regional economy struggling to recover from the recession.
The largest banks with local branches, Wells Fargo and Bank of the West, fared comparatively well in the most recent reports from Weiss and Bauer.
One of the smallest, Yampa Valley Bank, also fared well. Yampa Valley Bank received a C+, or fair, Weiss rating and five out of five stars, a "superior" rating, from Bauer.
"We have really prided ourselves on being locally owned … and really understanding the pulse of the Steamboat and Craig markets, because those are the only two (markets) we do business in," said PJ Wharton, the bank's president and CEO. "Because we're a community bank, we haven't been involved in some of the very large, speculative projects."
Bauer and Weiss ratings are two of numerous bank-researching tools for consumers. Bank rating data sometimes can be conflicting and is best viewed as part of a larger picture. Mountain Valley Bank, for example, received a D from Weiss but 3 1/2 stars from Bauer.
"Those are ratings from year-end, and our numbers are considerably stronger even today than they are from year-end. Those are kind of lagging indicators," said Terry Jost, Mountain Valley Bank's president and CEO. "From a general standpoint, we're seeing an improvement in the local economies. There's indications that this year could be modestly better than last, in most of our markets."
Middle-size Routt County banks, sometimes referred to as regional corporate banks, fared the worst in Weiss and Bauer ratings.
For example, First National's D- from Weiss and two of five stars from Bauer are described as indicating "weak" and "problematic" financial strength, respectively.
"A lot of those problems are behind us," Waller said.
Paul Clavadetscher is president of Millennium Bank's Steamboat Springs branch. He said Millennium Bank's ratings were hurt by real estate loans in another of the bank's markets. Millennium Bank has branches in Winter Park, Breckenridge, Edwards, Vail, Steamboat and Englewood. The bank received an E+, or very weak, from Weiss, and 2 stars, problematic, from Bauer.
"Millennium Bank in Steamboat Springs, we have no foreclosures, we own no real estate, and our loan portfolio is probably as good or better than any bank in town," Clavadetscher said. "We're showing quite a bit of improvement since December."
This week, federal regulators placed many of the nation's largest banks under consent orders, supervisory measures directing banks to overhaul mortgage practices amid foreclosures across the country.
John Kerst, business development officer at Yampa Valley Bank, said low bank ratings are, in many ways, a sign of the times.
"Banks are a reflection of the economy to a great extent," he said. "This economy is less than healthy."
John Stafford, spokesman for Bank of the West's Rocky Mountain region, said the economic outlook is improving for the bank, which has about 90 locations in Colorado, including a branch in Steamboat.
"Our loan losses were primarily in 2008, 2009," Stafford said. "We did not, for instance, make money in 2009. In 2010, we made (about) $185 million … compared to a loss the previous year."
Vectra Bank President Bob Kuusinen didn't put much stock in the bank's Weiss rating. The bank got a D from Weiss but received 3 stars from Bauer.
"We're in pretty good shape, and I think our rating with Bauer reflects that," Kuusinen said. "Certainly, all banks have had a tough couple of years, but I think Vectra Bank is doing very well."
— To reach Mike Lawrence, call 970-871-4233 or email mlawrence@SteamboatToday.com
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