First Republic Bancorp, San Francisco, plans to buy a thrift and loan in Nevada this year to complement its expanding Las Vegas-based mortgage banking operation.
Willis H. Newton, chief financial officer of First Republic, d the company will use $8 million of the $15 million in subordinated debt it is currently issuing to finance the purchase and capitalization of a small Nevada thrift and loan. Mr. Newton said the company hasn't announced which institution it will buy.
The company's First Republic Thrift and Loan is California's largest thrift and loan. Technically not a savings institution, its federally insured deposit products aren't as diverse as those of a savings and loan.
No Checking Accounts
It doesn't offer checking accounts, only passbook savings and investment certificates. California has a number of thrift and loans, though there are only a handful nationwide.
First Republic's lending activities are almost solely mortgage related. The holding company's thrift and mortgage banking assets total $1.3 billion.
Mr. Newton said that First Republic has had a mortgage banking subsidiary in Las Vegas for years and that the purchase of an insured institution will allow it to tap into the Las Vegas deposit base.
Increasing its retail deposit franchise is one of the company's goals for this year, and it is opening two branches in San Francisco, bringing the total to eight.
"This purchase isn't related to. our mortgage banking activities," Mr. Newton said. "We believe Nevada, and Las Vegas, is a good market for deposits."
First Republic isn't the first financial institution to target Nevada's lucrative Las Vegas market. California's superregionals have been the major players in the state for several years.
Besides First Republic, only one other smaller California financial institution has staked a claim inside Nevada. Sierra Tahoe Bancorp, Truckee, Calif., a Major small-business lender in Northern California, opened its Sierra Bank of Nevada in Reno in 1990. Sierra Bank of Nevada has been the holding company's only growing business since then.
The impetus for the move is evident. Las Vegas is the only one of First Republic's markets that hasn't been hit hard by the real estate downturn, according to Charlotte Chamberlain, an analyst at Wedbush Morgan Securities.
About 60% of First Republic's mortgage lending is in the San Francisco Bay area, with 24% in Los Angeles and just 15% in Las Vegas.