FirstBank Holding Co., the largest locally owned banking company in Colorado, is privately held and relatively low-profile.
Now the Lakewood company is moving beyond its traditional retail banking business into commercial lending, both in Colorado and a new market: Phoenix.
"We're coming to a saturation point in terms of locations and consumer business" in Colorado, "but there's a lot of room for growth on the commercial side," FirstBank Holding Co.'s chief executive, John A. Ikard, said in an interview last week. "A lot of other banks may be cutting back for various reasons, whereas we have a lot of money to lend."
The $9 billion-asset FirstBank operates 27 separately chartered banks with 120 branches in Colorado. Collectively, its banks control just under 9% of the state's deposits. Its share ranks second in the state, behind Wells Fargo & Co. (17.5%) and ahead of companies like JPMorgan Chase & Co., U.S. Bancorp, and KeyCorp.
FirstBank has one charter in Phoenix, FirstBank of Arizona, which opened in August and now has four branches. The unit plans to open four branches a year, he said, as its parent builds toward $15 billion of assets within five years.
"Phoenix is much larger than Denver and is growing faster, so we see a great opportunity for our company there," Mr. Ikard said.
From 2000 to 2007 the population of Maricopa County, Ariz., where Phoenix is based, rose 26.3%, to 3.9 million, according to the Census Bureau.
In contrast, the population of Jefferson County, Colo., where Denver is based, was flat at 529,354 in that period.
Since its founding in 1963, FirstBank Holding has emphasized retail banking, drawing deposits more from individuals than businesses and focusing on mortgages and other consumer loans.
But as consumer banking margins have thinned, FirstBank has turned to higher-yielding commercial loans and worked to attract more core deposits from businesses, Mr. Ikard said.
Over the past two years its commercial loan portfolio has increased 50%, to $1.6 billion, and even in the softening economy, the company expects to continue increasing loans by 12% to 18% annually for the next several years.
Its ratio of loans to deposits now stands at 45%, versus 35% in 2005, and Mr. Ikard said his company would like to get that ratio to 60% or 70%.
Still, its "conservative culture dictates" that the ratio remain lower than that of most companies its size.
That should not be hard. According to the Federal Deposit Insurance Corp., the average ratio for banking companies of a similar size was 96% as of Dec. 31.
After years of lackluster earnings, FirstBank's commercial focus is just beginning to pay off, with two quarters of double-digit earnings gains.
First-quarter net income rose 19% from a year earlier, to $28 million, excluding a pretax gain of $7.9 million from the sale of Visa Inc. stock. Total loans rose 20%, to $3.45 billion, and the net interest margin increased 34 basis points, to 3.8%.
FirstBank quadrupled its loan-loss provision in the first quarter, to $4.7 million, because of the softening economy, but Mr. Ikard said credit quality is holding up well, because his company does not make a lot of residential construction loans.
Don A. Childears, the CEO of the Colorado Bankers Association, said FirstBank's structure should help. Using separately chartered banks allows the executives to "get a little more ingrained" in the business community "than a branch manager can."
Larry Martin, the president of Banking Strategies LLC in Denver, said FirstBank is likely to get most of its commercial growth from its Arizona operations.
The company has had stellar commercial loan growth in Colorado the past two years, but it started from a very small base, Mr. Martin said, and even if other companies may not be lending as much, the competition for commercial loans in Colorado is still fierce.
"Plus, more people are moving to Arizona, because they can't afford to buy a home in places like California, and home prices are substantially less in Arizona," he said. "We have in-migration here in Colorado, too, but not at the same level."
From 2000 to 2006 Colorado's overall population rose 10.5%, to $4.7 million.
Any growth FirstBank manages is likely to be organic. It has never bought a bank, and it only promotes senior officers from within. Mr. Ikard said this policy has generated greater loyalty among its staff and lower turnover, but it also makes deals more difficult.
"I don't think we have a culture made for acquisitions," he said. "I don't see how we could really merge those two types of cultures together."
