Banking on It - April 2000

Banking On It

by Kim Pryor

Business Bank of Nevada

Growing smart

It’s a little like David versus Goliath. Small community banks up against the big banks. If that’s the case, Las Vegas-based Business Bank of Nevada, one of the first community banks established in a wave of openings that began in the mid-’ 90s, may have slung the first shot with an aim that’s right on target. By January 19, Business Bank of Nevada held $135 million in assets; John Guedry, president and CEO, predicts $180 million in assets by the end of 2000.

Such asset growth has enabled Business Bank of Nevada to make its first foray into other markets. In December, the bank expanded its operations to Northern Nevada with the opening of a branch in Carson City, adding to the three it maintains in Southern Nevada. The bank also hopes to open a Reno branch by year’s end. In Las Vegas, the bank is looking into expansion in the Green Valley area along with smaller, prototype branches catering to industrial businesses in other areas of town.

"We try to grow smartly," said Guedry. "If we wanted to be $300 million in size today we could have been. But our formula does not call for growth for the sake of growth. Our formula calls for profit."

In 1998, the shareholders paved the way for the bank’s expansion to Northern Nevada when they approved the name change from the parochial Las Vegas Business Bank to the more encompassing Business Bank of Nevada. The bank had opened in 1995, and two years later, issued an initial public offering, partially to ease future capital-raising efforts.

Currently, Business Bank of Nevada is leasing temporary space for its new Carson City branch. Bank officials expect to break ground soon for a 5,000-square-foot permanent branch, with a grand opening tentatively scheduled for August 15.

Even with more community banks entering Northern Nevada, it’s a relatively virgin market compared to Las Vegas. And Carson City’s less urbanized environment makes it easier to create a local bank, Guedry said. In fact, Business Bank of Nevada chose its employees with that in mind, including long-time Northern Nevada resident Jerry Gregory as senior vice president and regional manager.

Northern Nevada mergers disrupting the banking industry will also work in Business Bank of Nevada’s favor, according to Guedry. He expects Business Bank to appeal to customers affected more by long-term banking relationships than pricing, customers who feel comfortable that the bank will "hang" with them in low times or high. For example, an account holder at Pioneer Citizens walked into Guedry’s office after the Nevada State Bank merger and announced, "I’m ready to change because I just can’t stand the uncertainty of what’s going on."

"That proved to me," Guedry said, "that we’re on the right track."

Merger Makover

Customer still comes first

They say honesty is the best policy. Bill Martin, chairman of the board of Nevada State Bank, certainly agrees. He admits that the merger between Pioneer Citizens and Nevada State Bank, finalized January 14, will cause disruption for customers. But he compares it to shopping at a new grocery store. "The bread’s on the wrong darn aisle:’ Martin said, "and it just doesn’t make sense to put the bread over there."

Martin pointed out that merger mania has hit many types of businesses. When a merger involves a bank, however, it hits closer to home. "People become much more sensitive to change when it involves their money," said Martin.

Still, Nevada State Bank is doing everything possible to ease the transition for customers. And the benefits far outweigh the disadvantages, Martin said. Nevada State Bank customers can take advantage of features not previously available at Pioneer Citizens, such as weekend banking and computer home banking. In addition, Pioneer Citizens only had 13 ATMs; Nevada State Bank offers customers 60 additional machines throughout a statewide network. According to George Hofmann, Nevada State Bank president and chief executive officer, Pioneer customers also will notice an improvement in consumer business transactions due to a more encompassing statewide network.

Nevada State Bank customers will see advantages from the merger as well, according to Hofmann. Nevada State Bank now has a total of 58 branches statewide and a greater presence in Northern Nevada. "We’ve had difficulty finding great sites and great people:’ Hofmann said. "With the merger in Northern Nevada we pick up both of those."

Hofmann remains confident that any disruption the banks’ customers feel will be minor. Nevada State Bank and Pioneer Citizens are keeping 99 percent of their employees, so consumers will see essentially the same faces. Even Martin, previously president and CEO of Pioneer Citizens, has remained with Nevada State Bank. In fact, the majority of the merger’s 700 layoffs happened in Utah and Idaho.

The bank’s officials are making the transition as easy as possible for customers. Pioneer Citizens account holders keep their same account number and continue to use their Pioneer checks. At the same time, they’ve also been issued a Nevada State Bank account number; when their Pioneer Checks run out they can switch over to the Nevada State system.

"You receive complaints because people say, ‘Now I have two account numbers," Martin said. "People are so sensitive when it comes to their money that any change is not really welcomed. You’ve really got to win them over again."

Customers aren’t the only ones feeling the merger’s impact. Employees have been pulled from Nevada State Bank and placed in the old Pioneer Citizens branches to assist Pioneer Citizens employees in working through some of the systems and form changes. Employee focus groups also meet to discuss the merger’s impacts.

As far as the Nevada State Bank branch signs, anyone who blinks may miss them. If the Zion-First Security merger is completed in mid-March, as expected, Nevada State Bank soon will become First Security. But that transition should disrupt customers even less, said Hofmann. "We will not have to put the customers through one more change:’ Hofmann said. "The account numbers stay the same. Ultimately the only thing that will change is the name on their checks."

Meanwhile, according to Hofmann and Martin, the Nevada State-Pioneer Citizens merger is a marriage made in financial institution heaven. The goals of each bank — taking care of small and medium size businesses — parallel each other. Both institutions also follow the two community bank commandments: know your customer, and care about your customer service.

"Pioneer was famous for that," Hofmann said. "We believe we’ve done well at it also. That’s something that is very important to continue."