Peoples Bank, formerly known as Peoples National Bank, has become the first Colorado Springs area bank to be released from orders by federal regulators to reduce its problem loans, a clear sign that the area’s banking industry is beginning to recover from the most recent recession.
The bank, the second-largest based in the Springs area, has reduced its delinquent loans from 14.1 percent of its loan portfolio on June 30, 2009, to 1.2 percent of its portfolio on June 30 of this year; that’s the lowest level since Sept. 30, 2007, according to reports filed by Peoples with the Federal Deposit Insurance Corp. As a result, the U.S. Comptroller of the Currency’s Office has ended its 2009 order requiring Peoples to reduce its delinquent loan levels as well as boost its capital and reserves for potential loan losses.
The comptroller’s office said in a document ending the order that “the protection of the depositors, other customers and shareholders of the bank, as well as its safe and sound operation do not require the continued existence” of the order.
“This is an important milestone representing focus, determination and countless hours of work by all of our bankers,” Peoples Bank President Brendan Zahl said in a press release. “We are a much stronger, smarter organization with a very clear vision of the future. We are committed to responsible growth and high service.”
Three other area banks — Academy Bank, Park State Bank and Pikes National Bank — remain under similar agreements with federal regulators as does Rocky Mountain Bank & Trust, which is based in Florence but has its administrative operations and gets most of its deposits and loans in the Springs.
By most other measures, Peoples has recovered from its loan problems. The bank’s profits jumped to $1.91 million during the first half of the year, more than 10 times the $128,000 it earned during the same period a year ago. Peoples also has expanded its loan portfolio by 35.8 percent, or $38.6 million, during the past year and added 66 employees as it expanded into the Boulder, Denver and Fort Collins areas with its Peoples Mortgage Corp. unit.
Nearly all of the growth in the bank’s lending has come from making mortgages — Peoples Mortgage has closed more than $800 million in loans during the first three quarters of the year and expects to end 2012 with mortgage lending volume exceeding $1 billion, Zahl said in an interview Friday. The bank also announced it has merged Peoples Mortgage into the bank, converting it from a subsidiary to a division, as a result of regulatory changes that require mortgage operations of banks to be divisions rather than subsidiaries to be able to operate nationwide.
The bank, which operates seven branches in the Springs area with assets totaling $245 million, recently changed its name to Peoples Bank from Peoples National Bank to emphasize the word “bank” in its name, Zahl said.
The turnaround at Peoples parallels a similar improvement across the banking industry, where loan delinquencies are at the lowest level in more than three years, averaging 3.9 percent of the industry’s total loans as of June 30, according to the latest data available from the FDIC. The number of problem institutions and bank failures also are both down from a year ago.
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