Merger may send executives packing to community banks

Phil Levine

Tuesday, Oct. 19, 1999 | 11:34 a.m.

Pioneer acquistion completed

Zions Bancorporation of Salt Lake City said Monday it completed its merger with Pioneer Bancorporation of Reno. As a result, the Nevada operations of Pioneer Citizens Bank will be merged into Zions' subsidiary Nevada State Bank.

Each common Pioneer share will be exchanged for 0.5667 of a share of Zions. Based on Friday's Zions stock price of $53.188, each Pioneer share will have a value of $30.142 in Zions stock.

Bank officials say the merger of Pioneer and Nevada State will result in the third largest bank in Nevada. A spokeswoman for Nevada State said no immediate changes to either banks' operations are forthcoming. "It's business as usual for us," said Cindy Goussak.

Both banks' operating systems are expected to be fully integrated by the new year.

In Metropolitan Las Vegas, Pioneer Citizens has eight branches while Nevada State Bank operates 29 offices.

A wave of bank mergers means customers at four Nevada banks will soon be clients of one financial Goliath.

Those mergers -- combining Comstock, Pioneer Citizens, First Security and Nevada State banks -- will result in a personnel churn among bank officers that will leave a sea of new faces at local banks.

The final chapter in uniting the four banks is the forthcoming merger of Western regional giants First Security and Zions Bancorporation -- owner of Nevada State Bank. Experts say this last merger may result in significant layoffs and defections to competing banks.

Earlier this year, First Security was first off the mark, scooping up Reno-based Comstock Bank. A few months later, Pioneer Citizens was the acquisition target when Salt Lake City-based Zions announced its plans to buy that company. Weeks later, in a $5.5 billion stock swap, Zions added First Security to its roster. The new $40 billion company retains the First Security name and Salt Lake City as its headquarters.

Still, this activity is not unusual for Las Vegas bank customers. Over the last few years, customers at Las Vegas' Valley Bank, First Interstate, U.S. Bank, Wells Fargo, Norwest and Bank of America have seen their banks transformed by mergers.

For now, the head of First Security's Nevada operations says it's too early to assess the staffing changes that will occur.

"We are still evaluating what (staffing) we will need after the merger is complete," said Dave Smith. "We did institute a hiring freeze some time back, and hopefully that -- combined with attrition -- means we won't require many layoffs. However, those decisions haven't been made yet."

But in the wake of their recent mergers, other large banks have often watched -- or facilitated -- the departure of staff. Representatives of Las Vegas' community banks say those departures have added considerable depth to their pool of talent.

"Without question, the bank mergers have helped impact the rapid growth of our bank in two ways," said John Guedry, senior vice-president at Community Bank of Nevada. "They've (the bank mergers) increased the number of customers coming to us, but they've also allowed us to hire several experienced people who bring with them a lot of business. We have 56 employees at our bank, and in the last year we've hired seven new officers each with more than 10 years of experience. And all of them are from either Bank of America, Wells Fargo or First Security."

Tod Little tells a similar story.

"We've certainly hired people at all different levels -- from tellers to loan executives -- away from the big banks," said Little, chief executive officer for Silver State Bank. "As a matter of fact, I myself am a 'refugee' from U.S. Bank's Salt Lake City operations. I can tell you from experience that what often happens after (bank) mergers is people become internally focussed. They're so concerned with protecting their own stock that they lose focus on the business. Others simply look elsewhere for new opportunities. I expect we'll see a lot of opportunities to hire good people after that merger."

Adds Larry Woodrum, president and chief executive officer of BankWest of Nevada: "The big bank mergers have definitely allowed us to hire many people with considerable knowledge and experience. And I think when you look at what comes out of the (forthcoming) Zions and First Security merger, there may be even a larger turnover than from the other recent mergers."

"You have to remember that Zions and First Security were aggressive competitors for many years," said Greg Schultz, vice-president of Community Bank of Nevada and a 16-year veteran at First Security. "It will be a real test to see if they can co-mingle those two corporate cultures. I think you may find a fair number of people looking to move elsewhere (after the merger.)"

Woodrum agrees.

"There's going to be a bunch of overlapping when you put together three banks like Zions, First Security and Pioneer Citizen," he said. "And as our bank continues to grow, we'll need those kind of experienced professionals to help us expand."

Industry experts agree the constantly shifting sands of Las Vegas' financial sector prompted some customers in search of personalized service to turn to smaller banks.

However, representatives from Nevada's community banks and largest financial institutions paint very different portraits of their post-merger personnel landscape.

"The most recent merger has had very little impact on our staffing," said Laura Schulte, Nevada regional president of Wells Fargo & Co. "We learned a lot from our experiences with merging First Interstate. And after the Norwest merger, there was some duplication at the corporate level, however we've initiated our 'Retain and Retrain' program designed to keep our people with the company. I'm certainly not aware of anybody that's left specifically because of the (Norwest) merger."

Earlier this year, Wells Fargo and Norwest Bancorporation merged their operations, retaining the Wells name.

At Wells' rival Bank of America, post-merger staffing changes are described as "minimal."

"There's always some turnover in this business, but because NationsBank didn't have a presence in this market there was little impact in terms of required layoffs," said B of A spokesman Paul Stowell. "We also have our Priority Placement program that works to find a way to keep people within the organization." Six years ago, Bank of America bought out Valley Bank of Las Vegas; last year, B of A merged with Charlotte, N.C.-based NationsBank thereby forming America's biggest bank.

"Minimal" is certainly not how Tom McAteer would describe the personnel fallout from B of A's recent merger. McAteer's company, San Francisco-based Montgomery Resources, specializes in mid-level executive searches for various industries including the financial sector. Until recently, one of his biggest clients was Bank of America.

"In the wake of the NationsBank merger, you could say that they turned the faucet off when it came to recruiting new mid-level managers," said McAteer. "But this is something that's been coming for some time. Ten years ago, about one-third of our business was recruiting for the financial sector, especially B of A and Wells (Fargo). Today, it's probably about 1 percent of what we do.

"I can tell you with some certainty that there's been been a big migration of former (big) bank officers looking outside the (San Francisco) Bay area following the bank mergers of recent years."

In Las Vegas, the "migration" of banking professionals has often meant moving across town, rather than across the country.

John Slater is one such transplant. A veteran of two bank mergers, Slater initially entered the Las Vegas banking sector in 1988 as a branch manager for the former Valley Bank. Five years later, B of A bought out Valley Bank. Slater remained with the bank for another six years, rising in the ranks to become a vice-president. In January 1999 -- a few months after the B of A merger with NationsBank -- Slater left for his current position as a vice president at Community Bank of Nevada.

"I found that after the (Valley) merger, the lines of (loan) authority blurred," said Slater. "I was involved in relationship banking, and those changes made it more difficult to do a lot of that type of banking. We (Valley Bank) were servicing small and mid-sized businesses, and the fact is the big banks are geared more to mass marketing. It became clear that credit decisions would be at least partly determined by the size of the loan."

Still, representatives of the large banks adamantly defend their commitment to small businesses.

"In Nevada, First Security is primarily a business bank working with small to mid-sized businesses," said Smith. "Although we may look to expand our retail delivery systems, our loyalty will remain to our customers in that market."

Officials from Wells Fargo and Bank of America echoed those sentiments.

"We are the largest small business lender in the country and have a strong commitment in that area," said Wells' Schulte, while B of A's Stowell said his bank "continues to recognize the importance of commercial banking to our business."

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