Boston-based National Bank Holdings Corp. (NBH) has already gobbled up two struggling banks in the Midwest, setting up a local base of operations in Kansas City. But the company’s not done yet – it recently snatched up a failed Colorado bank, and is likely to keep its streak going.
The holding company isn’t a common name in Massachusetts, but it made headlines last month in Greeley, Colo., after submitting the winning bid to the FDIC for the failed, $1.07 billion Bank of Choice. Tim Laney, CEO of the holding company, said NBH liked the look of Colorado, with its bustling economy and booming population.
“This is a market that we think it will be very smart to be a part of,” he told Banker & Tradesman. Laney added that U.S. Census data and economic reports predict Colorado is outpacing the U.S. average in population, household income and economic growth – all of which make Colorado a tasty target.
The city of Greeley, the bank’s headquarters, lies in relative proximity to Interstate 25, which cuts through major cities including Denver and Boulder. The Greeley area is also home to strong energy and agriculture businesses, which Laney said are both industries of interest to NBH.
Sound Strategy?
But the 17 Bank of Choice branches are located quite a ways from NBH’s existing bank, Bank Midwest, which was formed after NBH purchased Bank Midwest and the failed Hillcrest Bank, both of Kansas City, in quick succession in 2010. Between the company’s current base in Kansas City – on the eastern end of the state – and Greeley, Colo., lies the entire length of Kansas and approximately one third of eastern Colorado. It’s a sparsely populated region, and therefore has fewer, if any, banking targets.
Laney said NBH is going to focus on strengthening its two markets and said the company was looking for more growth opportunities – but acknowledged that it wouldn’t be feasible to try to link Kansas City and Greeley by purchasing Kansas banks in the middle.
NBH started in 2009 and raised $1.15 billion initially for its investments, as reported by Banker & Tradesman in January. It then quickly bought the $4 billion Bank Midwest and the $1.6 billion, failed Hillcrest Bank. NBH Holdings was founded by ex-Citizens Bank executive James Connolly, who passed away from a heart attack in January 2010. But its crew of mostly former Citizens personnel carried on and subsequently hired new CEO Tim Laney, a former Bank of America executive.
Analyst Don Musso, owner of New Jersey-based financial institution consultancy FinPro, told Banker & Tradesman that buying a bank at FDIC auction is an excellent way to add scale at very little cost – the FDIC, after all, usually guarantees roughly 80 percent of the failed bank’s loans. FDIC-assisted takeovers of sizable but troubled banks are often a better deal than buying a pricier, healthy bank, he said.
What’s more, a “rollup player” like NBH is a rare thing in the Rocky Mountain region, Musso added. While several well-capitalized holding companies have taken up residence in Georgia and Florida – where en masse bank failures have ensured a steady supply of acquisition targets – the small amount of failures in the mountain west have kept such businesses from setting up camp there. As an early entrant, NBH has an advantage.
But, Musso said, from here on out, success depends on how NBH manages its past acquisitions while adding new ones. Between the two different markets – the Midwest and the Mountains – the bank can likely find efficiencies at the holding company level. But he added it might be tricky to add another market to the mix, or to grow too unwieldy to manage efficiently.
Still, Laney indicated that NBH had Colorado on the brain, calling Bank of Choice the “first” acquisition in the state.
“We’ve been focused on the state of Colorado for some time – it’s been part of a broader plan.”
