Independent banks emerge

Stan Wilmoth, president of Heritage

Bank of Nevada, underscores the value of

community banks such as his with an

anecdote about the quick, personalized

service small independent banks can offer.

"A customer came to me four months

ago and said her application for a homeequity

line had sat at a larger bank for over

a month. 'How long will it take you to

make a decision?' she asked. I said if she

had all her information in order, we would

get her a decision that afternoon."

Wilmoth and Brad Cannon, Heritage's

chief credit officer, moved the application

forward to the appraisal step, and the

woman's credit line was funded 14 days

later,Wilmoth says.

Community banks those with state

charters, and which aren't branches of outof-

market banks are on the upswing in

Washoe County, battling for a share of the

$3.7 billion pie of deposits.

Since 1999, three community banks

have started up in the Reno area, joining

Heritage Bank, formed in 1995.

First Independent Bank of Nevada opened

in 1999, followed by Northern Nevada

Bank in 2000 and Nevada Security Bank

in 2001. This boomlet signifies a rebound

of the local market share of deposits held

by independent banks after a recent surge

of acquisitions.

In 1999, independent banks, with a

combined 14 offices, boasted about 24

percent of the market among institutions

insured by the Federal Deposit Insurance

Corporation. But that percentage dropped

to about 4 percent after three independent

banks sold to three larger banks. Colonial

Bank bought Interwest Bank, First

Security Bank bought Comstock Bank

(which Wells Fargo later bought) and

Nevada State Bank bought Pioneer

Citizens Bank.

Community banks still have less 6 percent

of the overall market in the Reno

area, says Robert Hemsath, president and

CEO of Northern Nevada Bank. "Over

the past year, all of the community banks

have continued to grow and have gained

some market share."

The most recent statistics from the

FDIC, through June 30, 2001, showed

that First Independent Bank had 2.14 percent

($78,961,000) of FDIC institutions'

deposits in Washoe County; Heritage

Bank had 1.66 percent ($61,156,000) and

Northern Nevada Bank had 0.45 percent

($16,678,000). Nevada Security Bank,

which opened later that year, did not have

figures reported.

The big boys dominated Washoe's market

of $3,689,798,000 in deposits, led by

Wells Fargo Bank Nevada, whose 27

offices had 34.82 percent

($1,284,850,000) of the market. Bank of

America's 14 offices had 21.55 percent

($795,093,000); Nevada State Bank's six

offices had 10.72 percent ($395,587,000);

and U.S. Bank's 10 offices had 8.53 percent

($314,874,000). California Federal

Bank, Farm Bureau Bank, Bank of the

West, Colonial Bank, other Wells Fargo

units, First National Bank of Nevada and

Sun West Bank had a combined 20.13

percent of the market.

Banks in Washoe County have about

17 percent of the $21.3 billion market

share of deposits among FDIC-insured

institutions in Nevada, according to

FDIC statistics.

A resurgence in independent banks was

inevitable, says Grant Markham, president

of First Independent Bank. "The bank

acquisitions that have occurred in the

recent past definitely created a community-

banking void in the market and opportunity

for new bank startups."

In addition to Interwest, Comstock and

Pioneer Citizens, two other local indies

Sierra West Bank and Nevada Banking

Company also were acquired by regional

or national banking companies in the

past few years.

"Typically, when banks are acquired

and some of their executive officers are

eliminated in the process, you will see new

start-ups as a result," Markham says,

adding, "The opportunities in this market

were so strong with the elimination of five

community banks that it was inevitable we

would see the numbers grow again."

While smaller banks offer essentially

the same interest rates as larger banks, the

indies promise more personalized service

than larger banks, and close commitment

to the local economy.

"The northern Nevada market has historically

shown strong support for its community

banks," Markham says. "The larger

banks may argue the point, but we compete

first of all with personal service, i.e.,

personal contact with the customers, direct

access to the bank employees no 1-800

numbers local decision-makers and

people who identify with and are a part of

the local community.

"With today's technology, there isn't

much difference in products that can be

offered by community banks versus the

larger banks. At First Independent, we

also try to be innovative and make it convenient

for our customers through things

such as courier service, Internet banking

and a large, free ATM network."

First Independent Bank opened in

September 1999. Nevadans, mostly from

the north, hold more than 90 percent of

First Independent's stock, Markham says.

"We have become the fasting growing

community bank in northern Nevada,

already reaching about $140 million in

total assets, and added our second branch

in Sparks in February of this year.We have

recently purchased a parcel of land on

Kietzke Lane in Reno and will hopefully

begin the construction of a new head

office for our bank in March or April of

next year."

Investors mostly from the local area

chartered Northern Nevada Bank in October

2000. "We have grown steadily over the past

two years and now have approximately $55

million in total assets," Hemsath says.

Their respective banks are committed to

long-term goals in the local market, rather

than eventually selling to a larger banking

company, Hemsath and Markham say.

"Acquisitions are the result of a larger

regional or national bank looking for an

opportunity to quickly enter a market with

an established infrastructure and immediate

market presence," Markham says.

"Acquisitions can also, however, be

prompted by an acquiree who sees an

opportunity for a big payday for its shareholders,

or by the shareholders themselves

who see an opportunity for a substantial

return on their investment."

Northern Nevada Bank is bullish on

northern Nevada, Hemsath says. "There are

great opportunities for all types of businesses.

Community banks play an important role in

the growth and stability of the economy by

providing the necessary capital for businesses

to grow and prosper."

Heritage, which specializes in meeting

loans from $100,000 to $2 million for small

businesses, has $96 million in assets, an office

each in Reno and Carson City, a third office

to open Sept. 30 on Damonte Parkway in the

south Truckee Meadows, and a fourth slated

to open in March 2003 on West Seventh

Street near Keystone Avenue.

Heritage was formed by a group of

business people in northern Nevada determined

to provide banking services the

local market lacked,Wilmoth says. "We're

owned by 360, primarily northern Nevada,

families," he says.

"We have a niche here. A lot of community

banks are formed for the sole purpose

of making a quick sell. Our plan is to

continue growing our bank in the northern

Nevada market and continuing to give

great customer service. We really don't

have plans to sell our bank."