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Banks assure customers, look to woo others

John Seelmeyer

Competitors of the failed First National Bank of Nevada last week were assuring their customers that their money was safe at the same time that some banks began wooing customers of First National.

Denny Williams, market president in Reno for Mutual of Omaha Bank, which took over the deposits of the failed bank, said the bank hadn’t lost a single business customer during the first few days after the failure and reopening.

But it wasn’t because competitors weren’t trying.

“We want to play offense in the marketplace, not defense,” said one of those competitors, Rudiger Merz, executive vice president of marketing for Nevada State Bank. “The opportunity is there.”

The most recent figures available from the Federal Deposit Insurance Corp. show that First National Bank held 9.3 percent of the bank deposits in the Reno-Sparks area at the middle of 2007, and about a 6 percent share of the market in Carson City.

The first step for financial institutions in the area was calming the nerves of their existing clients.

Top executives of First Independent Bank of Nevada, for instance, were on the phones early last week, letting business clients know that their bank remains strong and well-capitalized.

Hal Giomi, chairman and chief executive officer of the parent company of Nevada Security Bank, said bank executives were surprised that they received only a handful of calls after they’d prepared for more.

Heritage Bank of Nevada President Stan Wilmoth, meanwhile, issued a statement emphasizing the bank’s conservative management and growing profitability.

Wilmoth also dealt with a headache that resulted from confusion over names. The California subsidiary of

First National Bank Holding Co. operated as First Heritage Bank, and some consumers mistakenly thought the Reno bank was among those taken over by Mutual of Omaha Bank.

Even credit unions moved to reassure their members. Ritch Van Duzer, president and chief executive officer of Clearstar Financial Credit Union in Reno, said his staff fielded a few calls from members worried about their deposits after the First National failure.

He acknowledged that bank failures weaken consumer confidence, but said the 15,000-member Clearstar remains strong.

Along with their efforts to calm jittery nerves, some bank executives hoped their messages about safety and soundness might open the doors to woo business customers away from their current banking relationships.

Jim DeVolld, president of First Independent Bank, was encouraging business owners and managers to take a close look at the capital available to help their current banks weather tough economic times. First Independent is owned by Western Alliance Bancorporation, which has assets of $5 billion.

And Grant Markham, the bank’s chief executive officer, was encouraging customers to take a close look at the ways they can structure their accounts to provide maximum FDIC insurance.

Merz said Nevada State Bank staff had identified business customers of First National Bank and bankers were beginning to make contact with them.

“We’re looking at this from an opportunistic standpoint as well as from a strategic perspective,” he said.

Wells Fargo, the largest bank in the region, didn’t get distracted by the failure of a competitor down the street.

“In the wake of last week’s news, things are business as usual for us,” said spokeswoman Natalie Brown.