Matrix Bancorp Inc. is the second-largest bank or thrift holding company based in Colorado, but it is hardly a household name in its home state.
Founded in 1993, Matrix has operated primarily as a wholesale mortgage lender and servicer, with few customers in Colorado. Its only branch is on the 12th floor of a Denver high-rise.
That is changing, though, as Matrix aims to transform itself into a more traditional community banking company.
Since December it has bought out two founding partners who had opposed the makeover, hired a new senior management team that includes the former Colorado division president of Compass Bancshares Inc. of Birmingham, Ala., and started hiring commercial lenders.
Within several months Matrix plans to open the first of five new branches and, if shareholders approve, change its name to the more bank-like United Western Bancorp Inc. to reflect its intention of serving business owners in the fast-growing communities along the Rocky Mountains' Front Range.
Matrix officials stopped short of saying that the old model was not working, but they clearly believe the company has a brighter future as a local bank.
Colorado is a leader in job growth, and Guy A. Gibson, Matrix's chairman, said deposits along the Front Range have grown nearly 30% since 2002, to $57 billion, and should keep rising as the population grows.
"We believe that Colorado's economic demographics are very attractive," Mr. Gibson said. "Our targeted market is very large, and there is substantial opportunity for us to grow our market share."
Mr. Gibson had co-founded Matrix and was its president until he left in 2002 to run a securities clearing firm he had bought from Mutual of Omaha Insurance Co. Last fall he approached Matrix's board of directors with the idea of reinventing the company, and though most directors were receptive, the two other co-founders were not.
So in December the company conducted a private stock offering in which it raised $97 million. It used the bulk of the proceeds to buy out the two founding partners and other like-minded investors. The tender offer effectively shifted control of 80% of the company's shares from a small group of investors to more than 300 investors who bought shares in the private offering.
The buyout allowed Matrix's board to pursue its new strategy, and in December it hired Scot T. Wetzel, formerly the president of the Colorado division of Compass, to execute it.
Mr. Wetzel, the chief executive officer, said he is confident his bank can add $150 million of deposits and $150 million of commercial loans within a year after it opens its first new branch. Within five years its balance sheet should resemble that of other large community banks, he said.
"We believe we can quickly grow to a much bigger bank, because we already have the ability to make loans up to $20 million," he said.
As for deposits, he said, there is nowhere to go but up. Though Matrix has the No. 8 deposit share in the Denver metropolitan area, according to the Federal Deposit Insurance Corp., it has almost no retail deposits.
Matrix would seek to "capture market share from every other bank - plus get our fair share of organic growth," Mr. Wetzel said. "This gives us an exponential upside."
Investors have reacted favorably to Matrix's new strategy. On Nov. 7, the day the company announced its proposed private offering and management change, Matrix's stock soared more than 30%. It has risen another 39% since then, closing at $23.51 Friday.
As part of the transformation, the company said last week that it would seek shareholder permission to change the holding company name to United Western Bancorp Inc. and its bank's name to United Western Bank.
The company also said last week that it had hired two regional presidents, one to head its downtown branch and another to head a branch in the Denver suburb of Cherry Creek that is set to open late in the third quarter or early in the fourth quarter. The company has also named a new chief credit officer and expects to announce additional hirings soon to staff future branches.
Larry Martin, the president of Banking Strategies LLC in Denver, said that the chance to snag Mr. Wetzel, who left Compass in August, was a key factor in persuading the board to shift the company's focus.
Mr. Wetzel joined Compass in 2000 and led an expansion in Colorado that nearly tripled its branch network there. Before that he had been the head of corporate banking in Colorado for KeyCorp of Cleveland.
"When Scot became available, they just felt they had a tremendous opportunity to become more of a traditional bank than [one] pursuing all of the niche businesses that really have never produced significant earnings for the institution," Mr. Martin said.
Matrix's earnings have been sluggish in recent years. Though it owns a trust company in Texas, most of its business has revolved around wholesale mortgage lending and mortgage servicing for itself and other banks.
In 2002, Matrix lost $9.3 million as the value of its mortgage servicing rights plummeted during the refinance boom, and it lost another $1 million in 2003.
That year it got out of the wholesale mortgage origination business altogether, while it continued to service mortgages. At the time its management had said that it was too difficult to compete in a low-margin business line dominated by larger companies. In 2004, Matrix sold several related subsidiaries and began outsourcing its mortgage servicing operations.
The company will continue to service mortgages for others and operate its trust company and remaining subsidiaries. (It still has about $1 billion of mortgages on its books from its wholesale business.) Though Matrix will offer mortgages through its branches, it will focus more on bringing in commercial business.
The Denver area has become a hot banking market of late, with more and more banks headquartered in Colorado or elsewhere opening branches or loan production offices there to take advantage of the economic growth.
Mr. Wetzel said that he plans to hire talented bankers "from Colorado's best community banks" to compete in the busy market.
"The majority of my banking career has been in this community, and I know exactly who I'd like to have on this team," he said.
Mr. Martin said that Matrix will succeed if it can find ways to keep bankers from straying elsewhere once on board.
"There are 90-plus institutions in the Denver market alone, and everybody's trying to hire the right bankers," he said. "A lot of people Scot's recruiting now will make the move because they have a lot of respect for him, but the key for Matrix will be what kind of handcuffs they'll use - stock options, warrants - to keep these bankers loyal to the organization."
