When Rawlins National Bank was founded in 1898, Rawlins, Wyo., not far from the Oregon-California Trail, was a booming frontier town.
Over the next 100 years, though, Rawlins' growth slowed considerably, and it eventually became a sleepy small town. In the past 10 years Rawlins National's asset size has been about what it is now, $125 million.
But the bank aims to accelerate its growth by opening branches in Colorado, along the Front Range of the Rocky Mountains, said Richard Chenoweth, its president and chief executive.
"The Front Range is an area of tremendous growth, and we want to be in a market where there's more opportunities for viable long-term growth," Mr. Chenoweth said.
Rawlins National is able to enter Colorado because in 2004 it bought a charter from the $1.1 billion-asset Community Banks of Colorado in Greenwood Village for about $250,000. Colorado's interstate banking law allows out-of-state banks to effectively buy "collapsing charters" from Colorado multibank holding companies consolidating their charters, which Community did in 2004. After a Colorado company merges all of its banks under one charter, the remaining charters can be sold to other banks.
Colorado is one of many states that out-of-state banks cannot enter unless they buy a charter first. Most will move into these states by acquiring other banks, but buying collapsing charters is becoming an increasingly popular option.
For example, in March the $350 million-asset Heritage Bank of the South in Albany, Ga., announced it was buying the $1.8 billion asset Ameris Bancorp in Moultrie, Ga., for $1 million so that it could obtain a Florida charter. Last week, Coastal Banking Co. in Beaufort, S.C., and First M&F in Kosciusko, Miss., said they were buying charters in Georgia and Florida, respectively, from Ameris.
Rawlins National would like to open its first branch this fall somewhere between north Denver and Fort Collins, and is looking for local bankers to staff it, Mr. Chenoweth said. It intends to open several more branches in the area and already has a loan production office in Denver.
Mr. Chenoweth knows the market well. Before he took the job at Rawlins National in 1993, he was the president of the $50 million-asset Platt Valley Bank in Brighton, Colo., about 20 miles northeast of Denver. (In 1994, Platt was bought by the $248 million-asset Valley Bank and Trust in Brighton.)
Larry Martin, the president of Banking Strategies LLC in Denver, said that although the Front Range is becoming more competitive, Rawlins should do well given that Mr. Chenoweth had worked at Platt from its opening in 1971 and probably still has many contacts there.
About a dozen, mostly larger banking companies have entered Colorado by buying banks and keeping their assets to immediately gain market share. But Richard Fulkerson, Colorado's banking commissioner, said that about a dozen smaller banks have found it much cheaper to buy collapsing charters and then open a branch or two to start.
(Technically, a Colorado banking company would sell both the charter and the assets of the merging banks, and the acquiring bank would immediately sell back the assets and keep the charter, Mr. Fulkerson said. This way, acquirers adhere to the law that says they must buy banks that have been operating in Colorado for at least five years.)
Mr. Fulkerson said that lately out-of-state banking companies of all sizes have been attracted to Colorado, whose economy has been growing at a decent clip. On June 1 two announced deals to beef up in the state: U.S. Bancorp of Minneapolis said it was buying the $705 million-asset Vail Banks Inc. of Avon for $98.6 million, and the $7.7 billion-asset UMB Financial Corp. of Kansas City, Mo., announced it was buying the $282 million-asset Mountain States Bancorp. of Denver for $83 million.
Colorado is drawing growing numbers of people from West Coast cities seeking more affordable housing and those from the Midwest seeking better opportunities and a better quality of life, Mr. Fulkerson said. "We have a much more diverse economy than we had a decade ago, and we're particularly strong in telecommunications and construction of housing and major public projects," he said.
As luck would have it, Mr. Chenoweth said, things have picked up in Rawlins since his bank bought the Colorado charter. Oil and gas exploration companies have found fields west of town, creating jobs and stimulating the local economy.
"We're experiencing core deposit growth for the first time in 20 years," he said, though it rose only 3%, to $112 million, in the second quarter from a year earlier. Oil and gas exploration should continue for some time in the region, but Mr. Chenoweth said he expects most of Rawlins National's growth to come from its new Colorado operations.
