First Security becoming a statewide banking force

First Security Bank is developing a statewide presence with its plans to acquire two Northern Nevada banks.

The bank's Salt Lake City-based parent company, First Security Corp., announced last week it will acquire Comstock Bancorp, Reno, and its Comstock Bank subsidiary for $65 million.

The move will expand First Security's presence in the state from 14 branches in the Las Vegas area to 24 offices statewide.

Figures released by banks operating in Nevada and statistics compiled by The Bauer Group Inc. show First Security will be tied for the position of Nevada's third-largest bank with the acquisition of Comstock and Nevada Banking Co.

Nevada Banking is a Lake Tahoe-area bank First Security announced it was buying last month.

The Bauer Group, a Coral Gables, Fla., research company that studies financial institutions, said Comstock had $200.8 million in deposits as of Sept. 30. Nevada Banking Co. reported $109 million at the time. Adding those totals to First Security's Nevada total of $895.2 million would give the bank about $1.2 billion in deposits.

That's about the amount California Federal Bank reported in October it would have in deposits after acquiring 12 branches from Wells Fargo and Norwest banks they were required to sell in their merger.

It's also more than the $1.125 billion U.S. Bank reported having as of April 30, the most recent statistics the company has.

Dave Smith, president and chief executive officer of First Security Bank of Nevada, confirmed that a statewide presence is what the company is pursuing with the two acquisitions.

"It's definitely part of the strategy," Smith said. "We think we have a good customer base in the present facilities in the north. And, it really isn't our first exposure there from a franchise standpoint. We've had a mortgage and lending presence there for five years."

Smith explained that First Security has had home and car loan customers as well as a trust department in the north.

He said the company isn't planning any additional mergers or acquisitions once the Comstock and Nevada Banking deals close.

"I think what we have now has given us a good head start and that's where we're focusing for right now," Smith said. "We feel we can offer an enhanced product and grow the bank through these opportunities.

"Comstock Bank has developed a distinguished reputation serving Northern Nevada businesses and consumers since 1981," he added. "The bank is very well capitalized and profitable and makes an excellent strategic fit."

Comstock Chief Executive Officer Robert Barone, best known as the producer of an extensive quarterly analysis on the Nevada economy with a focus on Northern Nevada, plans to stay with First Security when the acquisition is complete.

Whether his economic reports will continue hasn't been determined.

"They already have their own research team," Barone said of Kelly Matthews, the bank's Utah-based chief economist, and his staff. "But they did say they were very impressed with the reports."

Barone said another quarterly report is in the works and will be released in March since work on it began before the acquisition was announced.

He said his new role with the corporation hasn't been defined.

"We just signed the papers saying we were going to do the deal," Barone said. "Now, the process of working out the details begins. But I do expect the total employee count will be higher, not lower, after the deal is completed."

Barone said he expects First Security to keep all of Comstock's 118 employees.

It wasn't an easy decision to sell Comstock, Barone said.

"This has been our baby for years," he said. "You don't just turn it over to someone else without having some misgivings. But overall, this is a win-win situation for everybody involved. First Security is a good fit for the kind of banking we do. They're financially sound and community-oriented."

He said First Security's commitment to Northern Nevada is a reflection of the bank's expectations that the regional economy will stay healthy.

Barone said it is a common misconception that Northern Nevada's economy is hurting. He said Washoe County has a 2.9 percent unemployment rate and is better diversified than the rest of the state. Light industrial business is growing and that is helping offset the lagging performance of the tourism industry which, Barone concedes, is problematic.

Because the tax structure is geared toward a tourism economy, there isn't enough revenue being generated to keep up with needed services, he said.

Smith concurred.

"Tourism is down right now," Smith said. "But overall, it's a good economy and we're looking forward to working there."

First Security has been in Nevada for more than five years.

The company entered the Las Vegas market in 1993 when it acquired Continental National Bank and Nevada Community Bank. Smith had been chief executive officer of Continental National.

The bank expanded in Las Vegas in 1997 when it acquired American Bank of Commerce, boosting it to the fourth largest bank by deposits and the second largest business bank in the state. Company officials say it's also a top mortgage lender in Nevada.

First Security gets eight new branches and two lending centers in its deals with Comstock and Nevada Banking Co. Comstock has branches in Reno, Sparks and Carson City and lending centers in Reno and Carson City.

Nevada Banking Co. is a subsidiary of Xeon Financial Corp. of Stateline and the company operates bank branches in Stateline, Incline Village and Gardnerville.

Comstock, which has been in operation in Northern Nevada since 1981, attempted to develop a Las Vegas presence in 1993, opening two mortgage lending offices. Barone said competition was stiff and the offices were closed in 1997 after the company couldn't make enough money to justify keeping them.

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