BOULDER - Bankers in the region are cautiously optimistic about 2013, although they said the increased costs of dealing with federal regulation may put a damper on potential business growth.

Consumer confidence is coming back, with many companies in the region hiring and adding new equipment, or thinking about it, bankers said. However, sequestration, where government spending cuts of $1.2 trillion over 10 years could start on March 1 if the 2013 federal budget is not approved, may also bog down the current economic recovery.

"People are making investments into their businesses and companies are starting to hire a little bit again," said Cedric Buchanon, metro Denver city president at BBVA Compass, which has 40 locations along the Front Range and $2.5 billion in assets. "We're all looking to lend once again."

BBVA Compass is a subsidiary of BBVA Compass Bancshares Inc. the U.S. holding company based in Birmingham, Alabama (NYSE: BBVA). Buchanon and other bankers operating in the Boulder Valley spoke at the Boulder County Business Reports CEO Roundtable on banking Tuesday morning at the offices of Berg Hill Greenleaf & Ruscitti LLP in Boulder.

"There are obviously some headwinds out there with sequestration and other deadlines," said Peter Braun, first vice president of investments at UBS Financial Services Inc.'s wealth-management office in Boulder. "Overall, our results were great last year, and hopefully they will be in 2014 as well."

Home mortgage lending "just exploded" for Vectra Bank in the region in 2012, said Kirk Monroe, an executive vice president who works in Denver. The bank has about $2.4 billion in assets. This year is starting out slower than 2012 did, he said.

"We expect huge growth in that (mortgage) market for the next couple of years," Monroe said. "2014 will be the year we see things take off."

American banks have "taken our medicine (new government regulations)" and now are in a position to cautiously look forward, said Patrick O'Brien, market president of Guaranty Bank and Trust Co., ho manages branches in Boulder, Broomfield and Westminster. Guaranty has about $2 billion in assets. In general, bank business lending has gotten "aggressive" again, with the Denver region now No. 3 in small-business lending in the nation behind Austin, Texas, and Oklahoma City, O'Brien said.

First Citizens Bank also is on a lending kick, said Michael Thomas, vice president and commercial banker in Boulder. The bank has about $21 billion in assets.

"We want to grow for the right reasons," Thomas said. "You don't have uncontrolled growth if you have a conservative approach to the relationships you want to bring on board."

Potential loan customers seem to be savvier about their options these days and more willing to negotiate terms, said Susan Moratelli, Boulder community bank president for Denver-based ANB Bank, which has about $2 billion in assets.

"Cautious optimism is what we see for 2013," Moratelli said. "We need fee income to diversify the shrunken margins and profitability to keep our stamina going."

Two banks represented at the roundtable see 2013 in the region as an opportunity to grow in a new market. High Plains Bank based in Flagler plans to open a branch in Longmont in March. Home State Bank, based in Loveland, plans to open its 11th location in Lafayette at the end of February. High Plains Bank has about $100 million in assets; Home State Bank has about $628 million in assets.

High Plains Bank hopes to be able to capture commercial and residential loan customers not served by other banks, said John Creighton, executive vice president.

"Here, decision-makers work directly with customers," Creighton said. "We want to exploit that and capture that piece of the marketplace."

High Plains can underwrite and service mortgage loans in-house, said Chris McVay, who will serve as the bank's branch manager in Longmont.

"Customers with more complex balance sheets, where we know the customer, that's been a benefit," McVay said.

Home State Bank is much the same way, said Kevin Erickson, business banker. Home State Bank hopes to build on its success at a branch in Longmont for the past year and a half, Erickson said.

"Loan customers want a true, locally owned community bank," Erickson said. "We're looking for that growth again."

George Berg and Tom Merrigan from Berg Hill Greenleaf & Ruscitti LLP hosted the event, along with Jim Cowgill and Hy Harris from sponsor EKS&H PC in Boulder.

Peter Braun, first vice president, investments, UBS Financial Services Inc.;
Cedric Buchanon, metro Denver city president, BBVA Compass;
John Creighton, executive vice president, High Plains Bank;
Kevin Erickson, business banker, Home State Bank;
Chris McVay, vice president and Longmont manager, High Plains Bank;
Kirk Monroe, executive vice president, Vectra Bank.
Susan Moratelli, Boulder community bank president, ANB Bank;
Patrick O'Brien, market president, Guaranty Bank & Trust Co.;
Michael Thomas, vice president and commercial banker, First Citizens Bank;
Moderator: Chris Wood, publisher, Boulder County Business Report.