|
BANK STOCK |
|
2009 |
||
The Most Powerful Name In Corporate News and Information |
||
Energy | Energy-Tech | Energy-Infrastructure | Oil & Gas | Natural-Gas | Clean Energy | Renewable-Energy | Green | Energy-Analyst |
||
Precious-Metals | Resources | Mining | Metals | Gold | Capital Goods | Industrial-Goods | Product-Development | Waste-Management |
||
Healthcare | Biotechnology | Drug-Development | Pharma | Natural-Health | Medical-Device | Medical-Tech | Medical-Instruments |
||
Bank | Financial | Business-Banks | Community Banks | Commercial-Bank | Regional-Banks | Specialty-Finance | Bank-Analyst |
||
Pacific-Bank | Business-Developmentt | REIT | Services | Business-Services | Global-Services | Retail | Canadian |
||
Technology | Security | Authentication | Telecommunications | Semiconductor | Communications | Logistics-Tech |
||
CURRENT ISSUE | COVER ARCHIVES | INDEX | CONTACT | FINANCIALS | SERVICES | HOME PAGE |
||
First State Bancorporation Is Embarking On A Plan To Improve Their Capital Ratios Over The Next Six To Twelve Months Starting With Exiting Their Utah Operations And Deploying That Capital In Markets That Have Grown Successfully On The Deposit Side |
||
Interview conducted by:
Lynn Fosse, Senior Editor,
CEOCFOinterviews.com -
Published – August 22, 2008
CEOCFO:
What would you say is behind your deposit growth?
CEOCFO: How do you reassure people? Mr. Dee: “We do that in a variety of ways. The most important one is tapping into those personal relationships that many of our customers have with people at the bank, whether it be the CSR in a local branch or a commercial lender or someone such as I. We try to reach out to a lot of our customers and contact them and talk to them about it. We are very open about the financial condition of our bank and our company. As a publicly traded company, the information is out there for anyone who wants to seek it out, but we have tried to be proactive in terms of putting that information in the hands of our customers and taking it to them so they don’t have to look for it. That gives us some credibility and it also gives us the chance to explain to them some of the details about our financial condition. We also had a lunch meeting here in Albuquerque where we invited a large number of customers to come and hear our story first hand. We had over 400 people in the room to listen to bank senior management talk about the condition of the bank and clear up some of the misperceptions that were in the community about banks in general and about our company in particular. We have been very proactive with that and it has been very effective for us.”
CEOCFO: What is the economy like in the area you service?
Mr. Dee:
“Generally fairly good, especially compared to most of the country. New
Mexico is the state where the majority of our assets are and our economy
here has been very solid and steady of late. We tend to not have the peaks
and valleys of rapid growth and then contraction that other parts of the
country have. We have had a fairly stable economic base. Our unemployment
rate here is below 4%, we have had good job growth and our housing market
has seen very little pullback in prices. In the city of Albuquerque, housing
prices on average increased slightly from May of 2007 to May of 2008. We are
blessed with a very stable economy here.
CEOCFO: What about mortgages in general? Mr. Dee: “The mortgages that we have originated over the past several years we have sold in the secondary market, so we have very little exposure on our balance sheet. We did acquire in a couple of our acquisitions, mortgage loan portfolios that are generally well seasoned and we are not seeing significant problems in those. Mortgage origination is a source of income for us, and it has slowed down a little bit but it has been fairly steady. One of the benefits of our market is that there continues to be a reasonable amount of housing activity. The new building has slowed dramatically; it is about half of what it was a year ago here in New Mexico and probably less than that in Colorado and Arizona. The mortgage business that we have done has been primarily in New Mexico and Colorado and that has stayed at a fairly solid and somewhat surprisingly strong level for us this year. It is not as much of an income source as we would like it to be but it is doing fairly well in a slow market.”
CEOCFO: What are the areas where you are seeing increases or good returns and are there new areas you would like to undertake? Mr. Dee: “Probably the best areas for us have been our core commercial services, in particular commercial real estate, both on the construction and permanent loan side. About 80% of our loan portfolio is secured by real estate and the vast majority of that is commercial real estate. The commercial real estate markets across our footprint have done fairly well; vacancy rates are at very reasonable levels, lease rates have held up, and probably about 60% to 65% of our commercial real estate mortgage portfolio is owner-occupied property. We are looking to the cash flow of the business to service the debt as opposed to a group of lessees. That has been very good business for us, and it continues to be profitable from a pricing standpoint. We have low delinquency rates and relatively low non-performing levels in that portfolio, so that is the strongest part of our business right now. We are not looking to do anything new and different at this point. We are focused now on continuing to generate good core deposits primarily from that commercial deposit base as well as continue to service our commercial real estate customers.”
CEOCFO: Do you do much advertising? Mr. Dee: “We do a little bit from time to time. Most of it is image advertising. Recently we have promoted the CDARS product because of the concern of bank safety and FDIC insurance coverage. That product allows us to give individual customers up to $50 million of FDIC insurance coverage by essentially spreading their money among other banks nationwide. Therefore, that has been a product that we have advertised recently. Most of our advertising is pretty low-key image advertising.”
CEOCFO: You mentioned reaching out to people; do you find people are coming into you more for advice on how to be safe and secure than they did in the past? Mr. Dee: “Definitely! The average person in the US is very inclined to seek out assistance from someone that they feel is able to help them, and we have built up a good deal of credibility with our customer base over the years. We have seen a huge increase in that activity especially in the last sixty to ninety days.”
CEOCFO: What are some of your key concerns and how do you get beyond them?
Mr. Dee:
“Right now one of our key concerns is our stock price. The market, in
particular the short sellers have been very pessimistic on bank stocks and
so we have seen our stock price go down considerably. It went down so much
in the first half of this year that it necessitated that we take a large
good will impairment charge, which we did in the second quarter. Our focus
is rebuilding the confidence in the market place about our company and our
long-term prospects. We are focused now on preserving our capital and
deploying it as effectively as we can. The market seems to have presumed
that many banks, ours included, are going to have to go out and issue new
capital. At the present time, that is not a very attractive alternative for
most banks with depressed stock prices. In our case we are trading well
below our tangible book value; it just doesn’t make sense for us to go out
and bolster our capital so we are taking a different approach. We do expect
to shrink our balance sheet a little bit between now and year-end primarily
through the reduction in the Utah operation as well as run-off in our
remaining residential construction portfolio.
CEOCFO: Why should potential investors pay attention to First State? Mr. Dee: “The key here is that we have a very valuable franchise in a part of the country that over the long-haul is going to do extremely well because of population growth and other trends. Our bank now is positioned to where we have good capital levels and we are trying to improve those a bit more so that we can capitalize on the opportunities that are going to be there. Our stock is cheaper than it has ever been before, by whatever measure you use. Whether you look at it in terms of our earnings potential, our tangible book value, or our core deposit franchise; our stock is an absolute bargain in the market place at this point. We think that in the next year or so we will start to demonstrate very clearly that we do have continued long-term opportunities for investors to do extremely well especially getting into our stock at current levels.”
CEOCFO: Final thoughts, what should people remember most about First State Bancorporation today?
Mr. Dee:
“To sum it up, this is a very challenging banking environment. Our CEO and I
have been through much tougher markets in the late 1980’s and early 1990’s,
so what we see right now are not necessarily challenges as much as
opportunities. We have an outstanding group of people to work with in our
organization from senior management right down to the front lines; we are
very proud of our people and their ability to get the job done. We are
confident that they are going to help us be very successful over the next
several years. We will work through this current tough environment, and
provide some very nice returns for our shareholders and great long-term
results both for our employees and our shareholders.” |
Financial, Community, Commercial,
Business Banks, REITs, Insurance Stock |
|
“To sum it up, this is a very challenging banking environment. Our CEO and I have been through much tougher markets in the late 1980’s and early 1990’s, so what we see right now are not necessarily challenges as much as opportunities. We have an outstanding group of people to work with in our organization from senior management right down to the front lines; we are very proud of our people and their ability to get the job done. We are confident that they are going to help us be very successful over the next several years. We will work through this current tough environment, and provide some very nice returns for our shareholders and great long-term results both for our employees and our shareholders.” - H. Patrick Dee |
ceocfointerviews.com does not purchase or
make
recommendation on stocks based on the interviews published.