Money falling like snow

Bank deposits in Steamboat Springs growing; eight banks and counting

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Bank deposits in Steamboat Springs have grown at a double-digit pace the past two years, and the number of banks continues to grow, as well.

The aggregate deposits for seven banks here had grown by $84.5 million in two years as of June 30, 2005. Deposits are up 22 percent in that time, to $473.7 million.

Now, a new bank with roots in the Vail Valley is poised to open a branch in Wildhorse Marketplace. Longtime Steamboat Springs bank president Paul Clavadetscher will lead the Millennium Bank expected to open by March. That brings the number of banks here to eight, and that doesn't include a couple with more than one location.

"With eight banks in a community of 10,000, you almost have to scratch your head and wonder," Greg Dixson said. "But this community spends like a much larger community."

Dixson works for First National Bank of the Rockies, which has a new bank building under construction on Anglers Drive. He said his bank achieved 200 percent growth in deposits in the past year. That's partly because the Steamboat branch is so new.

"For us, our deposits are just a function of our business cycle in Steamboat Springs," Dixson said. "We've been here 18 months, but we've been on the Western Slope for 102 years."

Banks based in Steamboat Springs are Alpine Bank, Bank of the West, First National Bank of Steamboat Springs, First National Bank of the Rockies, Mountain Valley Bank, Vectra Bank and Wells Fargo Bank Steamboat Springs.

John Kerst, arguably the dean of Steamboat bank presidents, said he's not concerned that there are too many banks in Steamboat and thinks the growth in deposits here is not out of the ordinary.

"People always look at the number of banks in the market, but free enterprise works very well," Kerst said. "Each bank's opportunity to grab market share comes with how it serves its customers."

Kerst said the growth in deposits during the past two years is the equivalent of 10 percent to 12 percent growth per year, and it's not remarkable given the local economy.

"The economy has been strong here," Kerst said. "Real estate has been healthy, and construction is strong. But it's not only growth, but the stability of this market."

Is the influx of wealthy vacation homeowners driving the growth of bank deposits? Local bankers will tell you the answer is almost certainly "yes," but perhaps not in the direct way some people might suppose.

It's not so much that vacation homeowners are depositing millions in local banks, but that the construction and real estate markets are bringing increased prosperity to many full-time residents and small businesses, which make greater deposits in local banks.

"To me, that's a factor I don't know how I would quantify," Kerst said. In his view, the effect of vacation homeowners is more about increased economic activity than it is about the individuals.

Clavadetscher ranks the development of Catamount Ranch & Club (and other residential estate developments) right up there with the building of Steamboat Ski Area in terms of its effects on the local economy. He said he thinks that's the case not because of the relatively few members, who belong to the Catamount Golf Club, for example, but because of the types of social and economic institutions they help support, including restaurants and cultural organizations such as Strings in the Mountains.

Clavadetscher doesn't see buyers of luxury homes so much as second- and third-home owners, but as people who are increasingly dividing their time evenly between the Yampa Valley and distant cities.

"The people coming here love this valley the way we do, and there are a lot of opportunities for people to participate," he said.

The result of real estate growth, he thinks, has been more people living here full-time, a greater number of successful small businesses and permanent residents who are becoming more prosperous. All of those trends support the growth in banking.

Clavadetscher came to Steamboat 12 years ago to become president of Community First Bank, which was absorbed 18 months ago by Bank of the West, a subsidiary of a larger French bank. He notes there has been a trend among longtime bank executives here to begin fresh with a smaller bank in the market.

"You need to define how you will meet the needs of customers in Steamboat," Clavadetscher said. He's aware that bank customers here are comparison shopping and that it's a challenge to differentiate one's bank in the market. He describes banking as a relationship business.

Dixson said the "relationship banking" buzzword may be overused, but he agreed that a good day for a local banker is one in which a customer comes to him or her seeking advice.

"You know you've hit a home run when they come to you and ask, 'What should I do?'" Dixson said.

Dixson isn't as confident as Kerst that the local economy is stable. The twin forces of construction and tourism are vulnerable to one event outside the community, he observed. He also thinks the increasing competition among banks can create pressure in how borrowers are evaluated.

"Credit quality is a big issue -- safety and standards," Dixson said.

The competition for deposits and loans could lead some banks to take on more risk, Dixson said.

Clavadetscher noted that the Federal Deposit Insurance Corp. closely monitors the banking industry to ensure that sample loans issued by individual banks locally are within acceptable norms.

For consumers, the growing number of banks here adds up to an opportunity to shop for competitive fees and terms.

-- To reach Tom Ross, call 871-4205 or e-mail tross@steamboatpilot.com

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