Vectra Banking Corp. of Denver took another step toward consolidating Colorado's fragmented community banking industry last week when it announced the purchase of Bank Land Co., holding company for Southwest State Bank.
The deal, valued at $22.3 million and slated to close in the third quarter of 1996, would be the seventh for Vectra since its founding in 1988. The acquisition would increase Vectra's assets to more than $500 million.
Southwest, one of the last major privately held, independent banks in the Denver area, has a solid reputation, thanks to a strong record of customer service and lending to minority borrowers. Founded in 1961, Southwest has assets of $110 million and deposits of $96 million. It earned about $2 million annually in 1994 and 1995.
"It's an excellent bank and there were several reasons behind the deal," said Gary Judd, president and chief executive of Vectra. "It has a very solid history and reputation in this market, it gives us a very prominent market share in a quarter of Denver, which we really weren't serving, and it gives us direct access into the Asian and Hispanic markets, which we didn't have before."
R. Jay Tejera, analyst with Dain Bosworth Inc., Seattle, said the deal will help strengthen Vectra's branch banking franchise.
"True branch banking hasn't been developed in the Denver area yet, but Vectra is continuing to build on that concept," he said. "Vectra will have 12 locations and they're working on a strictly Denver-Boulder strategy, where 60% of Colorado's population resides."
The deal was made with an eye on the future, as out-of-state regional banks will likely continue making life more difficult for Colorado's independent institutions. Mr. Tejera said Vectra would be the second- largest holding company based in Colorado.
There are already several regionals battling for turf in Denver. Norwest, Banc One, and First Bank System, all out-of-state holding companies, are struggling to expand within the region.
Colorado's branch banking legislation lagged behind that of other states, and the state remains relatively unconsolidated. Mr. Tejera said he expects the number of independent banks in Colorado, more than 200, to be halved by the time the process is complete.
Last month Vectra completed the purchase of another Denver institution, First National Bank of Denver.
"We will never be the size of the large regionals we're going up against, but we're committed to the Denver-Boulder area and we think we can be very competitive in that area," Mr. Judd said.
Gary A. Mosko, Southwest's president and chief executive, will become an executive vice president with Vectra and continue to run Southwest after the purchase. Southwest has one location, which serves the central-western portion of Denver.
"Our strategy from the outset has been to grow through acquisition and internal growth, and we'll continue to pursue both," Mr. Judd said.