Given its modest size, the Denver holding company CoBiz Inc. has ventured into some unusual business lines: commercial insurance brokerage, employee benefits consulting, and now investment banking.
This month the $830 million-asset parent of Colorado Business Bank and First Capital Bank of Arizona bought the middle-market investment firm Green Manning & Bunch, also of Denver, for about $4.75 million of cash and stock.
Though industry giants such as U.S. Bancorp, which owns U.S. Bancorp Piper Jaffray, and BB&T, which owns Scott & Stringfellow, have long been involved in investment banking, it is rare for a small institution to venture into the world of "white-shoe" banking - and for an independent community bank, it is almost unheard of.
In 1998 Fort Lauderdale, Fla.-based Bank Atlantic, which has $4.8 billion of assets, bought the Livingston, N.J., investment banking firm Ryan Beck & Co. CoBiz - though growing rapidly - may be the smallest bank ever to buy an investment firm.
Susan L. Hermann, the director of communications at CoBiz, said Green Manning & Bunch, which has underwritten $4 billion of transactions in its 13 years, focuses on small and midsize companies.
"That's GMB's specialty, and that's the market we serve as well," she said.
Steven Bangert, CoBiz' president and chief executive officer, said he pursued the deal with an eye toward helping customers with family-owned firms who want to expand their businesses or sell them and retire. It is part of the company's effort to be all things to all its small-business customers, he said.
"If a business line is something that helps our clients, then we want to be in it," Mr. Bangert said in an interview this week. The acquisition of Green Manning & Bunch, he said, is "another step toward our goal of serving the needs of our customers at all stages of their business life cycle."
Joseph K. Morford, an analyst at Dain Rauscher Wessels in San Francisco, said CoBiz has created several cross-selling opportunities with its acquisition of Green Manning & Bunch.
"They have a pretty compelling product offering," said Mr. Morford. "CoBiz has pursued a number of opportunities that are off the beaten path for a traditional community bank."
The two companies were well acquainted before the deal. Before buying Green Manning & Bunch, CoBiz referred some of its commercial banking customers to the investment bank.
"From the very beginning of our plans to add investment banking, Green Manning & Bunch was at the top of our list of prospects," said Mr. Bangert. The deal was announced July 12, two days after it closed.
Mr. Bangert said owning an investment bank would help CoBiz right away - by attracting deposits from high-tech and telecommunications firms, he said, and by strengthening the company's Arizona operations.
"It will help us in tech because we haven't been a very willing lender to that sector," Mr. Bangert said. With an investment bank, however, CoBiz can offer private debt or equity placement to a high-tech start-up, giving it an opening to angle for deposits without risking a loan or a line of credit.
Mr. Bangert called Green Manning & Bunch's prospects particularly bright in Arizona - where CoBiz bought $104 million-asset First Capital of Phoenix on March 6 - because the state has "almost no local investment banking expertise. That's one of the things that got GMB excited about this deal, the opportunity to develop the Phoenix market."
Jack Green, one of Green Manning & Bunch's three principals, called Arizona "a really good market."
"With the bank having a platform down there, we'll have a lot of access," he said.
Green Manning & Bunch is CoBiz' third acquisition in five months. On March 6, the same day the First Capital deal closed, CoBiz bought Milek Insurance Services for $772,000 of stock.
And CoBiz has plans for more deals. Mr. Bangert said he would like to buy a money management firm.
Money management "was on the original list of businesses we'd like to get into that we drew up seven years ago when we founded CoBiz," he said. "It's the only one we're not involved in."
