Today customers of the seven branches of Colorado Capital Bank, including one in downtown Colorado Springs, walked into a new bank — the First Citizens Bank, which acquired the failed Colorado Capital Bank late Friday evening.
First Citizens Bank assumed the majority of the liabilities of Colorado Capital Bank, based in Castle Rock, Colo. in a deal it worked out with the Federal Deposit Insurance Corp.
The announcement was made late Friday night. The purchase is the sixth FDIC-assisted agreement for First Citizens Bank since July 2009, said Barbara Thompson, First Citizens Bank spokeswoman.
The acquisition should be seamless to customers, Thompson said.
“This morning, customers saw new signs and boards that talk about our history – we are 113 years old and one of the largest family-controlled banks in the U.S.,” Thompson said.
This latest deal doubles the First Citizens Bank presence in Colorado. The bank purchased Denver’s United Western in January.
“The latest agreement speaks to the strength of our company and a focus on building our franchise in vibrant markets,” CEO Frank B. Holding Jr. said in a prepared statement.
First Citizens was selected for the deal under a competitive bidding process, Thompson said. She would not say how long the bank had been looking at the Colorado Capital Bank.
It is always difficult when a bank closes its doors, said Fred Joseph, Colorado Securities Commission and acting State Bank Commission.
Based on the Colorado Division of Banking’s recent examination of the Colorado Capital Bank, it was determined the bank was insolvent, Joseph said. The bank’s liabilities exceeded its assets, he said.
“Its capital was wiped out,” he said. “At that point, we have to take action.”
In September, Colorado Capital Bank signed a consent order with the FDIC in which it agreed to raise capital, hire a new CEO, hire a chief lending officer and work through its nonperforming loans.
Then, Colorado Capital had about $900 million in assets, a decent 10-percent Tier-1 capital ratio and had increased its deposits year-over-year. But, lending had declined substantially, and its nonperforming loans-to-capital ratio jumped from 19.2 percent to 35.5 percent, causing it to fall under regulatory scrutiny.
A ratio of less than 20 percent is considered ideal.
On March 31, Colorado Capital Bank reported total assets of $717.5 million, net loans and leases of $598.7 million and total deposits of $672.7 million.
“The numbers are what they are,” Joseph said. “Nobody wants to see a business fail. It happens in every industry. Naturally, (the Colorado Division of Banking) takes their job seriously. They have to make the hard decisions.”
First Citizens Bank, which did not take funding from the federal government’s Troubled Asset Relief Program, had to post strong numbers in order for FDIC to approve the deal, Joseph said. As of March 31, First Citizens BancShares Inc. had $21.2 billion in assets.
First Citizens Bank and its IronStone Bank division operate network of 442 branch offices, telephone banking, online banking at firstcitizens.com and ATMs
Inside the seven Colorado First Citizens Bank branches — Boulder, Castle Rock, Denver, Colorado Springs, Greenwood Village, Edwards and Parker– associates met throughout the weekend to prepare for Monday morning’s opening, Thompson said.
“This is our sixth acquisition in the last two years,” she said. “We’ve really believe we know how to work with our new bank associates.”
Customer deposits are safe, accessible and still protected by FDIC insurance, Thompson said. Clients should bank as they normally do at their existing branches. They can continue to use their checks, credit, debit and ATM cards and will still have online access to their accounts.
Jim Harris, Wells Fargo senior vice president Southern Colorado business banking manager, said a new bank in town will not change the way his bank does business.
“We are in a very difficult industry right now,” he said. “Completion is not the top thing on the radar right now – We take care of existing clients, and we will be fine.”
Any time there is a change, however, it does provide opportunities, he said.
“We actually don’t want banks to fail,” he said.”It hurts the overall market. No one likes to see a foreclosure happen in their neighborhood. Banks are the same. We want all competitors to be happy. We are not wishing for anyone to fail.”