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N.M. banks too small? Loan opportunities wanted

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By Harold Morgan

Some banks are too small to succeed, suggests Joe Ricketts, founder of TD Ameritrade and presumably someone who knows his way around the financial world. Maybe “too small” means having assets under $10 billion, Ricketts wrote in the Oct. 30 Wall Street Journal.

Presented with Ricketts’ observation, a senior executive of a New Mexico-based bank chuckled. He’s not talking about New Mexico, the banker said.

Maybe Ricketts has a point. Consider: Wells Fargo Bank of San Francisco, headquartered near the Union Square shopping mecca, counts $8.5 billion of deposits in New Mexico. For the whole bank, the deposit total is around $1.3 trillion. At less than 1 percent of the company, New Mexico doesn’t make afterthought status.

Wells’ New Mexico deposit total dropped $450 million between June 30, 2016, and June 30, 2017, according to the deposit market share report from the Federal Deposit Insurance Corporation, a regulator. That loss is more than the total deposits of all but 15 banks doing business in New Mexico. Three of the 14 branches closed across the state during the period were Wells Fargo branches. The state had 473 branches as of June 30.

Deposits in New Mexico’s 58 banks declined $241.8 million during the year from June 30, 2016, to June 30, 2017. Without the Wells effect, New Mexico’s banks would have added about $209 million in deposits during the year. That sounds like a big number and it is. But that also would have been a gain of less than 1 percent or hardly any at all. In other words, bank deposit totals were flat for the 2016-2017 year, no surprise since the economy was less than flat, if anything.

My banker believes the real problem is a lack of demand for loans rather than regulatory constraints. He does have a CPA on staff tending regulations nearly full time. Unlike a few years ago, conversations about commercial and personal loans are happening, another banker said. But commonly those chats fail to turn into loans.

But deals do get done. Three banks shared a hotel project that was beyond the loan limit for any one of them.
Los Alamos National Bank, long the largest New Mexico headquartered bank, is less locally owned with the investment from private equity firms. The bank laid off 26 employees in October.

The 19-branch First American Bank of Artesia is the second largest state-based bank. First American had almost 3 percent of the market with deposits of $915 million in June.

The newest bank in the state, in name anyway, is Sunflower Bank, eighth largest with 13 offices and $991,485 in New Mexico deposits. Sunflower’s operations in Santa Fe, Los Alamos, Albuquerque, Las Cruces and El Paso have taken the name First National 1870. Headquartered in Denver, Sunflower has operations in Kansas and Missouri.

Money magazine picked Washington Federal of Seattle as the best bank for retail consumers in New Mexico (and Nevada, Idaho and Arizona), the magazine said, because it “is the only bank MONEY analyzed in New Mexico that doesn’t charge out-of-network ATM fees on basic checking; you also avoid a monthly fee.” Washington Federal came to New Mexico in 2013 by buying branches from Bank of America.

A different banking perspective comes from Nebraska, which has fewer people than New Mexico but with deposits of $64.4 billion, more than twice New Mexico’s $30.6 billion total. Another difference, perhaps an important one, is that First National Bank of Omaha and Mutual of Omaha Bank, two of Nebraska’s top four banks, which have combined deposits of $15.7 billion, are based in Nebraska. By definition they will focus on making loans in Nebraska.