Two more banks merge

Deal unites Pioneer Citizens Bank with Nevada State Bank

Nearly every Nevadan with a bank account has now been touched by the bank industry's merger frenzy.

Last week's announcement of Zions Bancorporation's proposed $340.8 million merger with Pioneer Bancorporation marked the end of Pioneer's status as the largest bank based in Nevada.

Zions, Salt Lake City, owns Nevada State Bank. Pioneer, Reno, owns Pioneer Citizens Bank.

The merger, expected to close in the third quarter, isn't expected to have a big impact on Nevada State Bank customers.

But bank officials on Friday said there hasn't been a decision on how many and which branches may close.

Because Nevada State Bank and Pioneer have several branches geographically close to each other -- most notably in downtown Las Vegas -- some of the existing offices will close. But executives said both companies have had expansion in their plans and the end result will be new offices in unserved areas.

The two banks, which have been neck and neck for the sixth position in market share in Nevada, each have about 5 percent of the market in the state and have about $1.2 billion in assets. Nevada State Bank has about $1.1 billion in deposits while Pioneer has about $900 million in deposits.

With those two banks joining the frenzy, the top seven banks serving the state have now been involved in merger deals in recent years.

The state's largest bank, Bank of America, is completing a $48.7 billion merger with NationsBank. That deal, announced last year, was an acquisition by Charlotte, N.C.-based NationsBanc Corp. of BankAmerica Corp. of San Francisco. The merged companies are keeping the Bank of America name. The most visible local change for them will occur in July, when a new logo is introduced on signs and corporate material.

Also last year, Wells Fargo Bank and Norwest Bank announced their $32 billion merger, with Minneapolis-based Norwest taking the lead in that deal. They retained the name of San Francisco-based Wells Fargo, although the switch hasn't been completed.

Wells Fargo had been in a merger in 1996 when it acquired First Interstate Bank, a transaction that most industry observers said was flawed by breakdowns in customer service.

California Federal Bank, which had been a minor player in Nevada for years, strengthened its position last year when it acquired 12 Norwest and Wells Fargo branches in the state that were required to be divested because of the merger.

Like the Bank of America merger, a merger involving U.S. Bank had little impact on customers. When the bank merged in 1998 with Minneapolis-based First Bank System, it kept the U.S. Bank name. There were some minor changes with accounts in that acquisition.

The existing customers of Salt Lake City-based First Security Bank were relatively unaffected by the company's end-of-the-year acquisitions of two Northern Nevada companies. First Security, which acquired American Bank of Commerce in 1997, announced at the end of last year it was merging with Comstock Bank and Nevada Banking Co.

The Zions-Pioneer deal is expected to boost Nevada State Bank's market share in the state from sixth to third behind B of A and Wells Fargo. Bill Martin, Pioneer's chief executive officer, is expected to be named president and CEO of the combined operation while George Hofmann, who has led Nevada State Bank for 4 1/ 2 years, plans to return to Salt Lake City where he will be named executive vice president and retail banking manager at Zions in Utah.

"I have a lot of respect for Bill Martin," Hofmann said Friday. "Not only is he a great banking executive, he's also a great community person, so I think it's a good fit."

Hofmann said customers would be notified if and when changes occur. He said a formal process of notification probably would occur in September explaining how old account types would be transferred.

Martin and Hofmann met with their employees about the merger Friday afternoon. Martin said none of Nevada State's 532 workers or Pioneer's 310 would lose their jobs as a result of the deal. In cases where there are duplications of services, some employees may be reassigned and the company just won't fill some positions when they are vacated through attrition.

Martin said it hasn't been determined how many or which branch offices would close, but there are about four locations where Pioneer and Nevada State branches could overlap. A branch Pioneer has planned at Rainbow Boulevard and Desert Inn Road is expected to go forward.

Martin will move to Las Vegas, where Nevada State Bank will remain headquartered.

"There's an awful lot of truly positive things with this merger," Martin said Friday. "Probably the biggest negative is the emotional side. We've built this franchise over the years and it's going to be hard to let go of Pioneer."

But he said Pioneer customers will greatly benefit from the deal. While Nevada State Bank customers may benefit from having a few more branches from which to operate, Pioneer customers will gain access to 45 branches and 45 automated teller machines.

Pioneer customers also will get something they've never had -- access to branches in supermarket locations. Nevada State Bank branches are in most Smith's supermarket stores in Southern Nevada.

"That's something I think our customers will really like," Martin said of the in-store branches.

The purchase price is about 22 times Pioneer's projected 1999 diluted earnings per share. The merger is expected to be immediately accretive to Zions' earnings per share, before cost savings or revenue enhancements.

Zions expects about $9 million in after-tax, merger-related charges in conjunction with the deal.

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