Making It Big
Six months ago, Parker's quintessential local bank--the Community Bank of Parker--was quietly bought by a group of investors with ties to Colorado's largest homebuilder. It's one more indication that Parker is booming, and the state's most prominent businessmen are taking advantage.
In the past two years, three of Parker's four banks have been bought by non-local investors and companies. First National Bank was bought by Norwest in early 1995. Then came the Community Bank acquisition late last year. Now the state banking board has approved a merger between Kiowa State and the larger Mountain Parks Bank, a regional chain in other small communities such as Evergreen and Conifer.
But because Community Bank retained its name, not everyone knows the bank has changed hands or that, while the bank calls itself locally owned, few of its owners actually live in Parker. Some of those who do know the bank has new owners are not all that happy. After longtime bank president Sandy Herzog left in May, the Parker Breakfast Club, a group of locals that meets every Monday to hear speakers, voted to withdraw its rather small account from Community Bank in protest.
"It was a symbolic gesture in favor of keeping local institutions local," says president Cindy Murphy. "There's a strong feeling in Parker to try to keep this as a town. It's important to many people here that institutions remain here."
Adds treasurer Jimmy Shauer, "I thought it was going to continue to be a community bank, but then they let the president go, and that upset a lot of people. We were all upset about banks buying up banks."
The provocative group of investors who purchased the bank for $5.5 million has strong ties to mega-developer Larry Mizel, who runs MDC Holdings, which owns Richmond Homes, one of the country's largest homebuilders and already a major presence in the Parker area. Community's banking rivals see the competition for business about to heat up; until now, the bank had been a small player in the county.
New bank chairman Robert Graf is the former head of Omnibancorp, the holding company of the Mizel-owned Omnibank chain. Shareholders Hal Guzofsky, Emil Hecht and Community Bank president Hank Coll also used to be part of Omni before the chain was sold to Key Bank of Cleveland for an estimated $123 million in 1994. And shareholder David Mandarich is president of Richmond Homes, "far and away the dominant builder in the Douglas County area," says David Laffone, president of Home Builders Research.
Now they've come to Parker, a town with an average household income of almost $60,000, in the heart of fast-growing Douglas County. Neither Mizel nor Mandarich returned repeated phone calls. Michael Guzofsky, son of Hal Guzofsky--who declines interview requests--says the new owners are "prominent people who want to retain as much anonymity as possible."
Mandarich was forced to resign as president of MDC in the late Eighties after allegations from the Securities Exchange Commission that he reported inflated profits from 1985 through 1987. The SEC settled the case in 1989, and Mandarich was retained as an MDC "consultant" at a salary of $480,000 a year; he subsequently was appointed president of Richmond Homes.
In the early Nineties Mandarich and Mizel both came under investigation of allegations that MDC illegally coerced subcontractors to contribute money to political campaigns and then reimbursed them by ordering them to submit inflated invoices. Recipients allegedly included then-U.S. Representative Hank Brown and presidential contender Gary Hart. Federal Judge Richard Matsch threw out the case in June 1992, but three MDC employees pled guilty, including Gary Mandarich, David's brother.
Another Community Bank shareholder is Phil Winn, former Colorado Republican Party chairman and assistant secretary of the U.S. Department of Housing and Urban Development in 1981 and 1982. After leaving HUD, Winn was part of what became known as the Winn Group, a collection of former agency officials turned developers who received more than $160 million in federal tax breaks and subsidies from HUD. Winn pled guilty in 1993 to one criminal-conspiracy count for making illegal payments to two HUD officials between 1985 and 1987. He served no jail time but paid a whopping $981,975 in fines.
The multiple connections to Mizel have some thinking that he is involved with Community Bank. Mizel is not one of the shareholders, though, and he signed a non-competition contract with Key Bank at the time of the sale, in August 1994, which stated that for three years after the closing date, the MDC chief would not "directly or indirectly serve in any capacity, or otherwise affiliate with any 'Insured Depository Institution' or any 'Depository Institution Holding Company.'"
Others think Mizel might be waiting in the wings. "I would suspect it, but I have not heard it," says Augie Fischer, former president of the Bank of Douglas County, which was bought this past March by First Bank of Colorado. "I'm sure legally there's no way he's involved. He's gonna make sure his fingerprints are clean." However, Fischer says it's likely Mizel will get involved in some way once the non-competition pact expires. "Is the sun gonna come up in the east? Those are the people he knows. I would be surprised if he didn't."
Herschel Pickett, the former owner of First National, says he doesn't think Community is big enough to support the large volume of deals that would make folks turn their heads. Besides, he sees the new bank owners' connections as good business. "What else do you want a boardmember to do if they don't steer you some business?" he says. "Community is just not big enough to handle their volume. I'll bet Mandarich has five or six outlets nationwide that have dollars available."
He adds, "If I was still president of First National, I'd say, 'Those son-of-a-guns got somebody on the inside who's gonna give 'em more business.' So what? That's competition. I don't think the local banks are uptight."
"Banks commonly use shareholders as business contacts," says Chris Payne, First United's vice president and general counsel. "Is First United afraid of the competition? No, we're not. I personally don't know that they'll have the lending limits to do the kind of loans Mandarich is interested in."
Richmond Homes already is well-established in Parker: The builder had 49 new construction starts in the town through the first six months of 1996, about 14 percent of the new starts this year. And in the past few years, Richmond has accounted for between 20 and 30 percent of new starts in Parker, which has seen an explosion of new residential building permits since 1992, according to figures from the town's planning department.
Richmond has built several homes in the quickly expanding block of housing developments east of Parker's small downtown. It's a foothold that could grow as the town does, propelled both by the ever more congested Parker Road, which blazes through the heart of town, its sides lined with more and more major retailers, and by the planned E-470 tollway expansion to Denver International Airport.
The town itself has fewer than 10,000 residents; but the Parker area, which encompasses a ten-mile radius from the center of town, has seen its population jump from 125,000 in 1990 to 164,000 last year and is expected to hit 200,000 by the year 2000.
At the same time the town is growing, the number of bank charters in Colorado is shrinking. This means that though the number of bank branches continues to increase, banks themselves are being controlled by fewer and fewer people. As of the first of the year, there were 231 bank charters, says Jim Thomas, executive manager of the Independent Bankers of Colorado. At their peak in the mid-Eighties--before the bust in petroleum and real estate closed many banks' doors permanently--there were more than 430.
Those who know Robert Graf say he simply saw a good investment. "I think Bob, when he walked away from Omni, probably walked away with some money in his pocket and is out trying to do his own thing," says Larry Martin, senior vice president of Land Title Guarantee. Adds Michael Guzofsky, "It's something Bob can call his own. The shareholder group is smaller. It's simpler. Bob doesn't have to wear a tie in Parker."
But opinion among locals is mixed.
"My impression of them is 'suits,'" says Dale Moser, who makes a living training animals for film and television projects. "Believe me, I know city folks. It's a real bad flavor from what it used to be, but I can't really condemn them. They're gonna run it the way they run Norwest or Omnibank."
Tony Johnson, who owns a paving company in Parker and is a friend of former bank president Herzog, says, "I looked for changes, but I'm very happy with Graf and his bunch. They are 17th Street pros, but they still have a personal touch."
Graf defends the "local" label his bank still touts, saying that you cannot define local ownership too rigidly: "Some people are gonna say you have to live on Main Street; some people are gonna say you have to live in the basement of the bank."
Land Title VP Martin says the tag is a "marketing thing. 'Local' sounds better. It implies, 'We're concerned about the health and welfare of this community.' In the world of banking, it's a little disingenuous, but compared to doing business with a large out-of-state institution, it's accurate.
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