A community bank in Truckee is the first in California to take advantage of the state's early opt-in to interstate branching.
Sierra Tahoe Bancorp, with $340 million of assets, said last week that it intends to merge its Reno subsidiary into its Truckee bank to form an organization serving customers in the two states under one name - SierraWest Bank.
"It's a riskless endeavor that makes a lot of economic sense," said Phillip L. Hage, an analyst at Van Kasper & Co., San Francisco.
The California Legislature allowed interstate branching last October under a federal law that takes effect June 1, 1997; Nevada had done so in September. The Riegle-Neal Interstate Banking and Branching Efficiency Act allows states to opt in before 1997 or to opt out entirely.
The California Department of Banking said it was not aware of any other bank applying to consolidate its multistate subsidiaries under the state's early opt-in law.
"I have not heard of anyone else doing this," said Alan Rabkin, general counsel of Sierra Tahoe. "I think there's a lot of interest out there, but it's more of a wait-and-see attitude, meaning waiting and seeing how a bank such as ours will deal with some of these issues."
The consolidation will merge three boards of directors into two, one for the parent company and one for the single banking subsidiary.
The California bank has 11 directors; the Nevada bank, 12, including seven or eight who serve on both boards. The holding company board has 11 members, each of whom sits on one of the subsidiary boards.
The two surviving boards will have up to 13 members, Mr. Rabkin said, probably with a lot of overlap.
As for the chief executives of the subsidiary banks, he said, each will become a regional president.
Sierra Tahoe also said that in conjunction with the move it has eliminated 20 jobs, some of which had already been cut during earlier restructuring. The staff reduction will cost the bank about $450,000 in pretax charges but will also yield modest savings in 1996 and about $900,000 on an annualized basis, according to a release.
"There are always redundancies when operating a multistate system," said Mr. Hage, the analyst, "and this is one way to hone ... operating costs."
