Competitors eye bank merger leftovers

Banks hoping to stake a claim in Nevada or bolster their present foothold may get their chance later this year when two industry giants merge.

Wells Fargo and Norwest banks will likely be required to sell some of their branches, deposits and loans in seven Nevada markets to comply with antitrust law.

The process could open the door to a new retail player in the local banking scene or it could solidify the standing of an established operator.

Some of the potential bidders are awaiting additional information from Wells Fargo and Norwest before expressing an interest, while others are simply playing their cards close to the vest on what could be a growth opportunity in a market acknowledged to be in an upswing.

Some of the possible suitors that already operate Las Vegas branches: Zions Bancorporation of Salt Lake City, owner of Nevada State Bank; Salt Lake City-based First Security Bank; Minneapolis-based U.S. Bank and Citicorp of New York.

Also, Chase Manhattan Bank and BankOne of Columbus, Ohio, which offer mortgages, car loans and credit cards to Nevadans, but don't have a retail presence in the state; and a number of community banks.

Of all the potential bidders, only one has publicly acknowledged wanting a piece of the Wells Fargo-Norwest action: First National Bank of Nevada, a small operation arising from the sale of Laughlin National Bank.

First National Chief Executive Raymond Lamb indicated his bank was interested in getting into the Las Vegas market, possibly by acquiring a branch closed as a result of the Wells Fargo-Norwest merger.

But that doesn't appear likely based on the direction the merging partners are headed.

David Downs, regional president for Norwest Banks in Nevada, explained that if Wells and Norwest are required to sell assets, they would likely put them together as one large package. That could work to the advantage of the larger banks, which have the finances to do the deal.

It would work against the community banks, which have the desire to expand, but lack the resources to buy what one executive estimated at between $800 million and $1 billion in assets.

Wells Fargo and Norwest announced last week the seven markets in which the two banks likely will be required to sell assets are Carson City, Fallon, Elko, Winnemucca, Yerington, Las Vegas and Reno.

That list isn't entirely attractive to community banks, which would covet branches in Las Vegas and possibly Reno, but do not want to operate in rural Nevada.

Downs described the tightrope Wells and Norwest are walking in the whole sale process.

"It's something that we don't want to do, but that we would have to do," he said.

"Why would you want to anger your customers? We'd rather keep those customers if we could. We'd prefer not giving them up."

Larry Haeg, a spokesman for Norwest in Minneapolis, said Nevada is one of two markets in which Wells Fargo and his company have overlapping service. Therefore, the Justice Department is examining every affected community in Nevada and Arizona to review commuting and shopping patterns to determine if the merger would be anticompetitive.

The merger application itself goes to the Federal Reserve, but the Justice Department conducts the investigation.

Downs said that within 30 days, Wells Fargo and Norwest should have some indication of how many branch locations, deposits and loans must be sold.

While most competing bank executives had little to say about their own banks' plans to bid for assets, some of them speculated about what their competitors may do:

* Nevada State Bank. Most of the industry insiders felt Nevada State Bank, a subsidiary of Salt Lake City-based Zions Bancorporation, would make the strongest play for the assets. Zions Chief Executive Officer Harris Simmons said Tuesday that Nevada State Bank would "possibly be interested." But he added he hasn't seen any details from Wells Fargo or Norwest. "We really don't know what their plans or or what they are going to divest," Simmons said. Nevada State Bank, however, acquired some rural branches when Wells Fargo bought First Interstate Bank and divested branches, an indication that Nevada State could be interested in serving Winnemucca, Yerington, Fallon and Elko.

* First Security Bank. Senior Vice President Russ Peterson, who oversees First Security in Nevada, said his bank is interested in expanding its franchise in Nevada. But that doesn't necessarily mean First Security would bid for the assets. Executives for the Salt Lake City-based bank also were mum on plans, although some industry experts said the company is capable and eager to do the deal.

* U.S. Bank and Bank of America. Both are completing or in the midst of their own mergers, which make some experts skeptical they would take on the Wells-Norwest assets. They also would be scrutinized by the Justice Department because of their size. U.S. Bank is a classic example of how a bank can benefit by taking on some other company's assets. When Valley Bank of Nevada, Security Pacific Bancorp and Bank of America-Nevada were merged in 1991 and 1992, some assets had to be sold to satisfy government guidelines. U.S. Bank, then headquartered in Portland, Ore., was the bank that entered the market and has grown to become a key player in the marketplace.

* Bank One, Chase Manhattan and Citicorp. All have Nevada customers in home mortgages, car loans and credit cards. Bank One, a popular player in Arizona where it has a domed baseball stadium named for it, is a force in the Southwest, but doesn't comment on acquisition plans. Chase "doesn't comment on these types of things, but we have not expressed an overwhelming degree of enthusiasm for expanding our branch network outside of our present footprint," said spokesman Ken Herz. In other words, Chase seems happy operating in New York, New Jersey, Connecticut and Texas -- but that doesn't mean the bank wouldn't consider the right deal somewhere else. Citicorp officials did not return phone calls seeking comment. Besides running a retail bank branch operation in Las Vegas, Citicorp has a big credit card processing center here.

* Community banks. Bill Martin, president and chief executive officer of Pioneer Citizens Bank in Las Vegas, said Wells Fargo and Norwest could effectively cut small banks out of the picture if they decide to divest the properties as one big package. The community banks don't have the financial clout to go after so big a package and they also would be less inclined to serve the rural communities. He added, however, that there would be nothing illegal about two or more of the small community banks forming a coalition or alliance in an attempt to make a bid, then split the assets among themselves if they were successful.

"But if you draw the rules too tightly," said Martin, "you'll lose some of your bidders."

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