Copyright © 2012 Albuquerque Journal
It was a sad and troubling sight.
Several dark-suited regulators huddled around the door to First Community Bank headquarters in north Albuquerque in the evening gloom of late January 2011. The $2.3 billion bank, the largest community bank in New Mexico, had failed. Bank officials opened the door, and the regulators swept in to nail shut First Community’s coffin.
The bank reopened the following Monday as the newest branches of US Bank, the nation’s fifth-largest commercial bank. A year ago this summer the last vestiges of First Community, including its computer systems and its signs, were subsumed by US Bank, a unit of Minneapolis-based U.S. Bancorp.
And a good thing, too, say three former officers of First Community who became officers of US Bank. Indeed, most of the faces familiar to First Community customers are with US Bank today.
US Bank recognized that its success depended on the relationships First Community had with its customers and in the communities where it did business, so it was determined to hang onto as much staff as it could, said Jed Fanning, executive vice president and group manager for New Mexico. Fanning had been First Community’s executive vice president.
A good outcome
“For senior management and a lot of employees, this has been a terrific outcome from what could have been a difficult transition for us,” said H. Patrick Dee, former First Community president and now community relations executive for US Bank’s Community Banking division.
“A lot of (customers) stuck with us,” said Paul DiPaola, regional president of US Bank’s New Mexico operation and a former First Community regional president. “They wished us the best, and we got it.”
Dee added, “We hope we can return the favor.”
The officers say US Bank’s philosophy is to operate like a community bank that just happens to hold $231 billion in deposits. Those resources allow the local bankers to make loans and offer products that First Community could not have imagined, Dee said.
“What we have now is the strongest bank in America with a much deeper product offering,” Dee said. “If there is something New Mexico needs that we don’t have I’d be hard pressed to know what it is.” At the same time, he said, “It feels very much like a community bank.”
US Bank in New Mexico is expanding its retail operations, beefing up its small-business lending capability, and plans to use its financial heft to tap into businesses, like municipal bond underwriting, that are impossible for community banks.
US Bank’s Clovis office is being remodeled. A new branch is being built in Las Cruces, one has been installed on Intel’s Rio Rancho campus, the company is scouting new branch locations in Albuquerque, its mortgage lending staff has been increased, and it has added wealth management and trust capabilities. New small-business specialists are in the branches. The bank plans to be a significant originator of Small Business Administration loans. It hopes to step up its consumer lending. It will offer payroll, funds management, merchant services and other non-lending services to small businesses.
“We’re getting ready to be a more robust retail bank,” DiPaola said.
US Bank is also preparing to deal with large and sophisticated customers that First Community couldn’t help, Dee said. “We can look at any deal now.”
Among the possible customers are municipalities, state government, large companies like Intel and PNM, universities, big health systems, contractors to military bases and national laboratories, universities and agricultural operations. US Bank can help large and not-so-large customers with export-import financing and foreign exchange as well.
“The core of what we do is still small business,” Fanning said. “We want to lend to small businesses. It’s what we’ve always done.”
The question is, are business conditions right for more lending?
‘A healthy correction’
Businesses have gone through some tough times, their balance sheets have been battered, many continue to shed debt, and others have completely reinvented themselves. Some businesses are on the right path, but the damage has been done to their books, making it hard for them to qualify for loans, Fanning said.
“We are sensing there is still de-leveraging,” Fanning said. Businesses want increased liquidity and lower debt. “That’s been a healthy correction” but it also decreases loan demand, he said.
“There is still a lot of caution” among the state’s businesses, Fanning said. “There is still a lack of confidence. There is a gradual improvement. There is not a bounce.”
Regardless of conditions, US Bank is preparing to be ready to lend when customers are ready to borrow. DiPaola said. “”We are positioned with product and with the ability to price. We’re geared up and ready.”