UNITED NATIONAL BANK OF DENVER In early 1988 Mr. Martin Klop was prohibited in Colorado. Most Colorado bankers, offered the position of Senior Vice however, believed that legislation enabling re- President-Funds and Financial Man gional banking and complete interstate banking agement at United National Bank of might pass the Colorado legislature by the late Denver. Klop had been serving in a similar posi 1980s and early 1990s, respectively. First Inter- tion for a much smaller bank in western Colo state Bank was part of a California-based holding rado. The new position represented a potentially company that had acquired troubled American attractive career opportunity with a larger bank National Bank in the early 1980s and that was and at a higher salary. Klop was quite comfort grandfathered before interstate banking was pro- able, however, in his current position, and the hibited president of his bank had urged him to stay. Klop A booming economy had produced rapid was concerned that the new position might rep growth in Colorado and the Denver area during resent some higher risks to him sonally. Ac. the late 1970s and early 1980s. By the mid-1980s, cordingly, he decided to do a thorough financial however, falling energy, agriculture, and real es- analysis of the United National Bank of Denver tate prices had resulted in a significant slowing of before accepting the offered position. the Denver and Colorado economies. Klop had The United National Bank of Denver was a been told that United National Bank's most re- wholly owned subsidiary of United Banks of Col cent profit plan assumed a bottoming of the en- orado, a holding company that also had whole ergy recession by late 1987 but a deteriorating or majority interests in approximately 45 other commercial real estate market in 1987 and 1988. Colorado banks and bank-related entities. The Clearly, such plans would affect the bank's funds assets of United National Bank represented ap and financial management decisions for the next proximately 60 percent of the holding company's couple of years. Although Klop believed the long- total assets. Klop's major responsibility would be term outlook for Denver and Colorado was for funds and financial management at United Na. good, he was concerned that it might be at least tional Bank of Denver. In his interviews, Klop 1989 before economic growth would return to learned that decisions for this bank could be made satisfactory levels. somewhat independently of the holding company To help reach his career decision, Klop ob- and the other holding company banks. tained financial information from the bank and The United National Bank of Denver was the from a UBPR comparing United National Bank largest bank in Denver. Because branching was with Peer Group 3 (all banks in the United States not allowed in Colorado, there were bank hold with assets from $1 to $5 billion). ing companies, franchised banks, loan production offices (LPOs)and Edge Act Offices in the state. In 1988, 52 Colorado-chartered banks, 5 foreign banks, 3 franchised banks, several Edge Act cor Although Klop realized there could be compa- porations, non-bank banks, and LPOs operated rability problems between a peer group of U.S. offices in the Denver SMSA. There were four which are in branching states, and banks in Denver (and Colorado) with assets of a nonbranching Colorado bank that was part of over $1 billion in early 1988United National a holding company, he assumed the comparisons Bank, with assets of $2.9 billion; First Interstate would still prove helpful in evaluating the perfor- Bank, $2.2 billion; Colorado National Bank, $1.3 mance of United National Bank. He also hoped billion; and Central Bank, N.A. $1.3 billion. Inter. that his analysis would allow him to identify many state banking and regional compacts were still of the bank's principal strengths and weaknesses. banks, many EXHIBITI United National Bank of Denver <