If approved by state authorities and the Federal Reserve Board of Kansas City, Colorado Mountain Bank in Westcliffe will merge with two banks on Colorado’s Western Slope.

The merger would involve Colorado Mountain Bank with its operations in Westcliffe and Fountain; the First State Bank of Hotchkiss and the Paonia State Bank in Paonia. Additionally, the Hotchkiss bank maintains a branch in the town of Crawford.

Hotchkiss is located about 20 miles east of Delta, and Paonia is about seven miles east of there.

According to a prepared statement from Craig Walker of Denver, chairman and principal owner of Colorado Mountain Bank, “I want to combine these community banks to create an even stronger, well capitalized and efficient institution to better serve our customers and communities.”

If the deal is approved by regulators, the combined assets of the various financial institutions will more than double the current holdings of Colorado Mountain Bank. According to a Dec. 31, 2009 balance sheet, Colorado Mountain Bank in Westcliffe and Fountain has assets of just under $84 million. The First Bank of Hotchkiss reported assets of around $55.8 million, and the Paonia State Bank had assets of around $51.8 million. The combined total would be approximately $191.6 million.

Bob Senderhauf of Westcliffe, one of the local bank directors, said the solid balance sheets for the Hotchkiss and Paonia banks reflect the sound economic agricultural base there, rooted in fruit orchards and cattle operations.

Roy Gillmore of Westcliffe, president of Colorado Mountain Bank, said customers will notice virtually no changes in day-to-day operations of the various banks. He said staff and management will stay the same, and that operations will simply become more efficient.

 “The resultant ‘bank’ name has yet to be determined,” said Walker. He said possible names have been preliminarily reserved with the Colorado Division of Banking for approval prior to submission to the Colorado Secretary of State. All bank offices would become branches, though each would retain their original bank names.

Additionally, once the deal is finalized, customers will be able to make transactions at five different branches, two remote drive-through facilities, two loan production offices and all ATM’s.

Currently, a six-member board oversees the Custer Bancorp holding company which operates the Westcliffe and Fountain banks. Members of the board include owner Craig Walker of Denver, Buford Thompson, also of Denver, Cody Thompson (no relation) of Colorado Springs, Bud Edwards of Florida, and Bob Senderhauf and Arlie Riggs of rural Westcliffe.

If the merger is approved, additional board members from the Western Slope operations will join the Custer Bancorp board.

The proposed merger will be reviewed later this month by the Colorado Division of Banking. If approved by that regulatory group, the proposal will then be reviewed and finalized by the Federal Reserve Bank of Kansas City. The Federal Reserve is accepting public comments on the proposed merger through Jan. 28; for information on how to submit comments, contact Federal Reserve assistant vice president Dennis Denney at 816/881-2633.

Colorado Mountain Bank in Westcliffe was originally established as Custer County Bank in 1979 by Oklahoma oilman Bob Parker.

Walker acquired the bank about 20 years ago, a few years after he acquired the Fountain bank. He acquired the Hotchkiss and Paonia banks and the Crawford branch about eight years ago, according to Senderhauf.

There are currently about 185,000 outstanding shares in Custer Bancorp, each with a net book value of around $105.

– Jim Little