Monday, June 7, 1999 | 11:11 a.m.
A Michigan company is taking a different approach to forming a new Las Vegas bank.
When the new Desert Community Bank is formed, founders will attempt to keep the flavor of a small, community bank while having the resources of large parent company.
Chairman Joseph Reid said the bank, which will be located at Twain Avenue and the Pecos-McLeod Interconnection, is being capitalized half by Las Vegas investors and half by a chain of holding companies, starting with the parent company, Capitol Bancorp Ltd., Lansing, Mich.
"The way we form banks is unique," Reid said of the effort. "It's a partnership between the company and the community with both sides putting up about half. We've gotten it down because we've done this 17 times."
Here's how Reid has formed banks in the past: A corporation is formed within the state and it functions as a holding company that partners with local investors. Once local investors put up about half of the money needed to capitalize the bank, it is acquired by the parent company.
In the case of Desert Community, holding companies in Nevada, Arizona and Michigan are listed as the acquiring companies because each owns a piece of the new Las Vegas bank. Capitol Bancorp in Michigan owns 51 percent of Sun Community Bancorp Ltd. of Phoenix, which own 51 percent of Nevada Community Bancorp Ltd.
Nevada Community Bancorp is putting up 51 percent of the $5 million capitalization of Desert Community Bank, which is being chartered through the Financial Institutions Division in Nevada.
Nevada Community Bancorp is the Nevada-based holding company headed by Executive Vice President Tom Mangione.
In effect, the arrangement allows the Michigan parent company to maintain control and offer its financial resources while a local board of directors and local executives make most of the banking decisions.
Reid said he has formed small community banks in Michigan and Arizona that way and is now reaching into Nevada.
"We usually wind up with a large number of individuals who really do consider it their bank because they're invested in it," Reid said. "We are willing to share the up side of a bank with people who live in the community."
Reid's plan is to form three community banks in the state. He is undertaking them one at a time to make certain that a market exists for the product. Reid has said he hopes to form at least two more community banks in the future and would use the same capitalization and acquisition strategy.
Scott Walshaw, commissioner for the Financial Institutions Division, said the Desert Community Bank state charter processing is proceeding. He said the investigation for a new bank entering the state usually takes three to four months to complete.
He said if a familiar company forms other new banks, the process takes less time because much of the background investigation is already completed.
"Normally, we review who the organizers are, the officers, directors, principal shareholders, philosophy and the business plan and, ultimately, the plan is evaluated as to whether it has a reasonable chance to succeed," Walshaw said.
He said the bank formation is somewhat unusual in that the company is organizing each one individually. While forming several at one time may be more time-efficient, Walshaw said Reid is testing the market to make sure it is receptive to his strategy the way it has been in Michigan and Arizona.
Because Capitol Bancorp in Michigan is one of the companies making the acquisition, the transaction also is being overseen by the Federal Reserve in Chicago.
Reid said if all goes according to his plan, Desert Community Bank would be open by midsummer.
Jim Howard, a former bank executive with Wells Fargo and a longtime Las Vegas resident, is the bank's local president. There are 15 from the Las Vegas area on the board of directors.
Howard said there is an important communications link between him and Mangione and during the start-up process he reports to the former First Interstate Bank executive. Once Desert Community is chartered, Howard will run the bank and Mangione will handle Nevada Community Bancorp's next start-up.
Once Desert Community is off the ground, Mangione will focus on starting up Red Rock Community Bank, which is planned in the Summerlin area.
Desert Community Bank will start out with about 12 employees, Reid said. It will function as a full-service bank with an emphasis on small-business loans. Reid also said the bank would deliver a higher level of personal service that most large institutions typically can't deliver.
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