What do you know about New Frontier Bank? We can pretty confidently say, that depends on where you live. If you live in Greeley, Colorado, where New Frontier was based before regulators closed it earlier this year, you know a lot. If you live in Colorado, you may know something. If you live in New York City, a lot less.
Narrowly speaking, the closing of New Frontier was local news, and so as it filtered up from Greeley, through the regional and national press, less and less of the story survived. This is how news works, and is not necessarily a problem. But if you look at the three versions of the New Frontier story—the local narrative, the regional narrative and the national narrative—you can see both what is lost and what is gained as the story transforms along its passage from local to national story.
Which version is best? All had their strengths and weaknesses and were aimed at different audiences. All offered important elements: the local press excelled on the human toll of the bank failure and at giving us a steady stream of facts, the national press—to the extent that it covered the story—excelled at fitting the failure into the troubles in the larger economy, with the regional press striking a medium between the two.
If we had to choose just one of these levels of distance, we would choose regional—the Denver Post’s Miles Moffeit did an excellent job—but that is a false choice, because all are available online. And so this post is an exhortation to be active readers, moving beyond the same national papers and down to local and regional ones as well. Taking our own advice, this is our first piece in a series on local and regional business coverage. Yes, what’s good and what’s not. But also how these local and regional stories reflect and are reflected by the national press.
So back to the three narratives of Greeley.
The Greeley Tribune, as might be expected, provides us with the factual blow-by-blow.
As the paper reported, New Frontier Bank had been operating under the concerned eye of federal bank regulators since 2008, but was rocked this spring when one of its major debtors—a large and problem-plagued Colorado dairy that had filed for bankruptcy in January of this year, alleged the bank had committed fraud in a complex scheme to inflate the value of loans to the dairy. In the wake of these allegations, an investment group called Colorado Financial Holdings, which had been looking to add much-needed capital to New Frontier, pulled out of the possible deal (it is unclear how much that had to do with the dairy’s allegations, and bankruptcy, and how much with a more general review of the bank’s books). In mid-March, by the way, the dairy’s owner was charged with cheating on his state income taxes.
Okay. So while all of this was going on, bank customers were understandably worried and withdrawing their money from the bank, adding to its financial woes. Then, in mid-April, authorities deemed the bank untenable and shut down New Frontier, ending its “reign as the largest locally owned bank in northern Colorado,” according to an April 11 Tribune article.
But the ripple effects were just getting started.
Those with loans from the bank, which specialized in lending to farmers, could be in trouble because a good percentage were in delinquency. The loans that no bank wants to take on will be packaged and sold, maybe at a fraction of their original value, to bidders across the country. Investors will subsequently decide either to keep the loans at the same terms or to renegotiate or to foreclose and sell the property. A large portfolio of farm loans went up for auction in mid-August, so a lot of farmers in Greeley are worried about their livelihoods right now.
The effect of this bank failure on Greeley is hard to overestimate, as the Tribune expressed in an April 14 editorial:
Like most of Greeley, we are still reeling from the news that the Federal Deposit Insurance Corp. is closing New Frontier Bank.
The editorial made the bank seem like an errant family member.
We are sad to see New Frontier go. Despite obvious problems in their business practices, they have been a good neighbor, and one that will be missed.
But, as the story progressed, the bank looked worse and worse. As a May 2 article announced:
The past three months of New Frontier Bank’s life have exposed a massive load of problems that go far beyond bad publicity.
In the first quarter of 2008, federal reports show a geyser of money pouring out of Greeley banking’s largest success story.