Aspen Bancshares Eyes Rich Niches
The arrival of ski season finds Aspen Bancshares preparing to build its home market while planning expansion to other well-heeled resort areas.
Flush with $4 million from an initial public offering last July, and convinced that the Colorado bank is operating in one of the nation's most recession-resistant locations, president Charles B. Israel said that over the next five years book value would double to $12 a share and that market value would triple to around $22.
A slope that steep would make Aspen, one of the country's most profitable community banks, an outstanding investment.
Shares Take Tumble
But even the bullish Mr. Israel acknowledges that the stock "has been laboring" lately. In recent weeks, it has fallen below the $7.50 it fetched in the IPO.
On Monday, the stock closed unchanged at $6.375.
Mr. Israel, who owns 5.3% of the shares, blames weak market performance on two factors: a shortage of analysts writing about the stock and a general "gloom-and-doom attitude among bankers" that obscures the industry's success stories and hurts the chances for growth and profits.
These factors overshadow recent success with "Club 534," a program at Aspen's subsidiary, Pitkin County Bank and Trust Co., which caters to wealthy customers who are not year-round residents of the famed resort in the Rockies.
None of Aspen's competitors offer anything like Club 534, a concierge service for bank customers who maintain a minimum of $50,000 on deposit in a money market account. Among other services supplied to these depositors, the bank arranges for maintenance of second homes in Aspen, secures hotel and restaurant reservations during the crowded winter season, and hosts its own parties.
Mr. Israel said in a recent interview that the program "has attracted over $30 million in deposits while adding only 1 1/2 employees to the bank. We have lower costs per employee than the average bank, even though our pay is higher per employee than average."
The bank has 29 employees and earned pretax income of $72,000 per employee, ranking 31st in the nation last year, according to the American Banker's annual survey of community banks.
ROE Reaches 27.45%
It also ranked ninth in asset growth and 11th in profitability among large community banks. In 1990, assets were $80.8 million and return on equity was a robust 27.45%.
With the IPO proceeds Mr. Israel hopes to acquire banks in other resort towns, such as Jackson Hole, Wyo.
Mr. Israel is not a typical banker. A native New Yorker, he got his start in the management training program of R.H. Macy & Co., the department store operator.
Later he ran a garment manufacturing firm with his brother, and then sold out to move to Aspen. He invested in Pitkin County, which was begun in 1979 through a private placement of stock, and eventually became chief executive.
Most major bank stocks slipped another notch on Monday, with big California institutions leading the way, as nervous investors continued to worry about the the nation's economy. [Graph Data Omitted]