BancWest buying seven LV First Security branches

Friday, Sept. 15, 2000 | 11:14 a.m.

BancWest Corp., a Honolulu company that operates Bank of the West and First Hawaiian Bank, will jump into the Las Vegas market next year when Wells Fargo & Co. and First Security Corp. sell it seven First Security branch offices as part of their $2.9 billion merger.

The deal will give BancWest its first retail presence in the hyper-competitive Las Vegas banking market. It entered the Nevada banking market last year with the purchase of SierraWest Bancorp, which operates in Northern Nevada and California. The company also has made loans for small businesses, recreational vehicles and boats in the Las Vegas market.

The Las Vegas banking market is now dominated by Bank of America and Wells Fargo and has many aggressive national and regional competitors like Nevada State Bank, U.S. Bank and newcomer Washington Mutual. The Las Vegas market is also a battleground for numerous community banks.

The seven branches to be sold, which have deposits of $392.5 million, are among 39 being divested by Wells Fargo, the nation's seventh largest bank, and First Security, Salt Lake City, to three different companies as a condition of their merger.

Wells Fargo was required to sell the branches in order to comply with federal antitrust law.

Its merger with First Security is expected to close in early October.

The seven branches are at 4813 S. Eastern Ave., near Tropicana Avenue; 2925 S. Rainbow Blvd., at Edna Avenue; 9021 W. Sahara Ave., at The Lakes; 2980 W. Sahara Ave.; 1690 E. Flamingo Road; 4050 Losee Road, in North Las Vegas; and 701 N. Valle Verde Drive, in Henderson.

Two other First Security branches, one each in Carson City and Stateline, are part of the divestiture package, which involves branches with a total of $1.5 billion in deposits. The Northern Nevada branches are being acquired by Colonial Bank, Montgomery, Ala., which already operates in Las Vegas and in Northern Nevada.

Also included in the package are 23 First Security offices in New Mexico, including 22 in metropolitan Albuquerque; three First Security and two Wells Fargo branches in Idaho; and two Wells Fargo branches in Utah.

"We're happy that we have reached another important milestone in the process," said Laura Schulte, president and chief executive officer of Wells Fargo Nevada. "But it's also a sad day for us, because we're selling team members and customers we don't want to sell."

Bank officials said there are 56 employees in the seven branches affected by the divestiture.

Schulte said Wells Fargo was guided by government formulas in selecting which branches it would sell.

"It's a process we went through with the Department of Justice," Schulte said. "You can't just get rid of the branches you don't want. They have to be representative of the market demographic and we had to hit a certain level (on deposits). We looked at a number of branches and their sizes. We wanted to divest the least number possible to minimize disruption, but the package still had to be attractive to a buyer."

Schulte said Wells Fargo isn't done shuffling branches. Still ahead is the consolidation of Wells Fargo and First Security offices -- those locations where there may be branches of each brank within close proximity of each other.

"We haven't even begun that yet," Schulte said. "We had to wait until the divestiture was completed before we could start and there's no definitive timetable on that yet. But, we hope to be able to announce something within the next month or two on consolidation."

She explained that consolidation could involve studies to determine which office in a particular neighborhood generates the most traffic. Questions of access and convenience will be considered. In some cases, she said, the Wells Fargo name may be put on a building currently occupied by First Security. Closed offices would be sold or leased.

At the same time, Wells Fargo is continuing to expand, she said. The company just opened a branch this week at 5410 W. Charleston Blvd., replacing two older branches nearby. Another will open next month near Russell Road and Arville Street and a branch is planned near St. Rose Dominican Hospital at Eastern Avenue in Henderson. And, she said, "we're always looking at dirt" on lots where new branches can be built.

Schulte said she is confident Bank of the West will make the employees Wells Fargo is losing comfortable.

That was verified by Don McGrath, president and chief executive officer of Bank of the West, who said First Security/Wells Fargo employees his bank will inherit will keep their same salaries and benefits when they change companies.

He said he sent each employee a stuffed animal -- a Western bear the bank uses as its trademark.

"The key to making the transaction successful is to keep our customers satisfied and our employees know our customers," McGrath said. "Our approach to the marketplace is like a community bank in that the delivery of service is through a high-touch basis."

McGrath said the bank has been through 10 acquisitions in the 1990s and has perfected the best ways to enter a new market.

BancWest operates 56 branches in Hawaii, Guam and Saipan as First Hawaiian Bank and 162 in California, Oregon, Washington and Northern Nevada as Bank of the West. The company has operations in Carson City and Reno and will open a branch in Sparks in November.

The company's retail focus has been on free-standing branches, but it is acquiring six in-store branches at Wal-Mart stores and Albertson's supermarkets in New Mexico. McGrath said there are no immediate plans for in-store branches in Nevada, but the company will watch for opportunities. It does expect to expand its network of offsite automatic teller machines in various locations.

Analysts who cover BancWest Corp. say the company's acquisition of seven branches in Las Vegas may be just the first step in an aggressive expansion strategy.

"They're in a growth mode and I think you'll see more of this type of expansion in high-growth markets that are attractive for greater penetration," said Tom Theurkauf, executive vice president of Keefe Bruyette & Woods Inc., New York. "Las Vegas' excellent demographics should point to better-than-average growth prospects."

Another analyst said because BancWest is acquiring old First Security branches, it should improve the company's opportunities.

"The fact that BancWest is acquiring First Security branches rather than Wells Fargo branches is an advantage for (BancWest), we believe," said Rosalind Looby of Donaldson, Lufkin & Jenrette, New York.

"First, the employees at these branches are likely to be more receptive to their acquirer given improved job security at BancWest vs. Wells Fargo," she said. "Second and more importantly, with the First Security brand going away, we believe (BancWest) is likely to experience less attrition from customers seeking to stay with the same bank."

Of six brokers following BancWest, two have issued "strong buy" recommendations, two have "moderate buy" ratings on the stock and two have "hold" positions.

BancWest's stock was trading this morning at $19.31, up 50 cents from Thursday's closing price of $18.81. Wells Fargo was trading for $45.31, down 12.5 cents from Thursday.

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