Bank of Boulder's Bosley: Creative Tactics Pay Off

BOULDER, Colo. -- An out-doorsman and an officer of the National Rifle Association, Steven Bosley has shipped almost 10,000 firearms to customers nationwide who, in return, made interest-free deposits in his bank.

A zealous jogger who takes to the streets at 4:30 a.m., Mr. Bosley arranged for his Bank of Boulder to sponsor an annual 10-kilometer race, which drew 31,000 people this year.

An innovator who constantly canvasses employees and customers for new ideas, Mr. Bosley helped found a credit card processing unit that cleared 21 million transactions last year for a nationwide clientele of 16,000 merchants.

Forefront of Community Banks

These are but a few dimensions of the 48-year-old banker whose institution was identified by an American Banker survey as the nation's most profitable large community bank last year.

"I wouldn't want a job anywhere else," said the energetic Mr. Bosley, who is Bank of Boulder's president and chief executive.

Mr. Bosley's bank, with $88 million in assets, racked up a $2.33 million profit, representing a strapping 2.9% return on average assets. That's more than triple the 0.82% ROA posted last year by U.S. banks having between $50 million and $500 million of assets, according to data compiled by Sheshunoff Information Services Inc., an American Banker affiliate.

The stellar results flow in part from what started out as off-the-cuff experiments.

Seeking to woo deposits from the owner of a chain of gas stations, for example, Mr. Bosley backed executive vice president Terry Hannum's offer to process the chain's charge transactions at cost if the vendor would make low-rate deposits. The business took off from there.

"None of us had backgrounds in bank cards," said Mr. Hannum, who's in charge of the processing unit. "But no one told us we couldn't, so we did it."

Getting a big boost after the introduction of computer networks, the merchant card processing center has grown to 85 employees from three. And last year it ranked 31st in transactions nationally. The unit cleared more than $1.3 billion of charge transactions in 1990 and supplied half the bank's income.

Right on Target

Another bit of spontaneity that paid off for Mr. Bosley was his guns-for-deposits advertising gambit in national hunting magazines such as American Hunter and Field and Stream.

Tapping a constituency willing to make noninterest-bearing deposits in exchange for custom Weatherby rifles and shotguns, Mr. Bosley established a national funding base. That facilitated the bank's growth over the past 15 years to $88 million of assets from $1.25 million.

Rejecting the bigger-is-better notion, Mr. Bosley has no interest in increasing Bank of Boulder's size much. Innovation and feedback from customers and employees would be stifled, he said: "If you get big and can't listen to your own people anymore, where are you going to get your ideas?"

On the Conservative Side

Despite Mr. Bosley's propensity for experimentation, it's clear the executive is a believer in restraints: The $600,000 budget for the annual Bolder Boulder race, for example, is controlled by bank personnel, who also coordinate most other aspects of the event.

"We don't dare let that go wrong," Mr. Bosley, who co-founded the race with runner Frank Shorter. "We own the event, control it, manage it, and make the decisions on it. It's ours."

Mr. Bosley, who has served on the White House Conference on Small Business, extends this same intensity to finer details of bank operations. His team has come up with an assortment of tactics to woo customers.

Drive-through teller windows, for example, are continuously open from 6 a.m. Monday morning to midnight Saturday. Employees routinely fudge on lobby hours so that customers arriving early or late can get their business done. Statements are often stuffed with fliers urging customers to write why they're "impressed," "pleasantly surprised," "satisfied," "a bit annoyed," or "mad as hell."

Mr. Bosley holds focus group meetings with the bank's employees, gleaning ideas and fielding questions. Bank of Boulder's workers have long-term options on 22% of the institution's stock. Medical and retirement benefits are extended to the part-time workers who help with round-the-clock teller windows.

Noninterest-Bearing Deposits

Somewhat surprisingly, given Bank of Boulder's top-performing status, the institution is not exhibiting superior credit quality. The bank's 2.06% ratio of problem loans to gross loans at Dec. 31 was a scintilla higher than the 2.05% ratio for the 5,212 banks in its peer group, according to Sheshunoff. What's more, Bank of Boulder's problem-loan ratio leaped to 3.75% during the first quarter as the peer group ratio rose to 2.24%.

Aside from the substantial supplement provided by the merchant-processing unit, earnings appear to have benefited from a hefty concentration of noninterest-bearing deposits. At Dec. 31, for example, Bank of Boulder's 23.1% ratio of noninterest-bearing deposits to total assets was almost twice the peer group ratio.

And the bank apparently charges higher rates on loans: Its $8.06 of interest and fee income for every $100 of average assets during 1990 was 22% higher than the peer group's $6.62. Still, Mr. Bosley maintains that the bank doesn't "squeeze the last nickel" out of every deal.

A Caring Attitude

Indeed, what Mr. Bosley says is the key to Bank of Boulder's success is a caring attitude that extends to employees, customers, and the community itself.

For his own part, Mr. Bosley is a prolific participant in civic and business affairs, citing affiliations with the Republican Party, Boulder Technology Incubator; the American Fitness and Running Association; the Colorado State Banking Board; and Boulder's hospital, school district, chamber of commerce, and YMCA.

"What you invest in the community eventually comes back to you," Mr. Bosley said.

The son of a Nebraska high school principal, Mr. Bosley got his first taste of Boulder when he earned a bachelor's degree at the University of Colorado. After graduating in 1968, Mr. Bosley served in the United States Navy and later settled in Portland, Ore., where he met his wife.

Reservoir for Tough Times

Mr. Bosley joined the Bank of Boulder in 1975, about two years after the institution was founded.

The executive is quick to acknowledge that Bank of Boulder is by no means immune to the economic ills that beset its constituents. The bank was decidedly not a top performer in 1987, for example, when it suffered a $750,000 loss stemming from realty loan defaults.

Mr. Bosley says he's not an advocate of draconian underwriting standards, however, saying that overly tight controls "would be a disaster" for the local economy. The executive said the bank relies on its robust capital base - equity equaled 9.2% of assets at Dec. 31 - to see it through tough times.

Now that Colorado lawmakers have authorized a phased introduction of statewide branch banking, Mr. Bosley expects quite a few counterparts to be swallowed by the big bank holding companies based in Denver.

But the executive expressed a belief that his bank's deep roots in Boulder will keep the institution flourishing. And as for navigating a rapidly changing regulatory and economic landscape, Mr. Bosley simply plans to stay lean and flexible.

"In this environment, there's no way to devise a five-year plan," Mr. Bosley said, "so our goal is to adapt to the changes faster than anybody else."

PHOTO : STEVE BOSLEY strives to beat his rivals in adapting to change.

PHOTO : STELLAR RESULTS: Bank of Boulder's strong profits flow emerged in part from president Steven Bosley's experiments.

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