City National grabbing bigger share of Nevada market


City National is getting a bigger toehold in Nevada's financial markets with the acquisition of deposits, loans and seven branches from failed Sun West Bank.

In buying assets of the busted bank Friday, City National, informally known as "the bank to the stars," is making a bet on Nevada's future.

"It's a further step in City National's long-term goal to be part of the Nevada economy," said Russell Goldsmith, chief executive of City National and the $20.7 billion-asset City National Corp. holding company.

Goldsmith expects no short-term recovery, but on Tuesday he said Las Vegas and Nevada, in the long term, "will provide the kind of dynamic economic growth that they always have."

City National was founded in 1954 and has served as the bank for many Hollywood celebrities, including California Gov. Arnold Schwarzenegger, star of the "Terminator" movies, and Frank Sinatra.

Goldsmith is former chairman and CEO of Republic Pictures.

However, his banking team faces an unglamorous task in Nevada. City National agreed to take responsibility for selling repossessed real estate and working out problem loans at Sun West.

City National will pay for 20 percent of the bank's losses with the FDIC picking up the balance through a loss-sharing agreement.

It already has put some money at risk. City National paid the Federal Deposit Insurance Corp. a 0.67 percent premium for deposits of Sun West.

In an e-mail, Service1st Bank Chief Executive Officer William Martin described City National as a well-regarded West Coast bank with "limited local visibility" because of its modest size in Nevada.

"The purchase of Sun West Bank's book of business will help them immensely by improving their business volume and local identity, including through more branch locations," Martin said.

"They are best-known for their wealth management and trust services rather than being a consumer bank, but they are certainly active in business lending," Martin said. "This should be regarded as their intent to be a larger player in Nevada banking."

The acquisition of Sun West adds about $100 million in core deposits to City National's $375 million in deposits in Nevada. That doesn't include Sun West's $210 million in brokered deposits, which are typically sold to investors based on interest rates. Bankers consider brokered deposits "hot money," because depositors often move their money when they find better interest rates at another bank.

Goldsmith expects to retain local customers who like City National's "strength, safety, soundness." Also, City National offers a more extensive menu of products and services than Sun West did while Goldsmith said City National gives clients the kind of personal banking services not found at giant institutions.

City National will expand its presence by retaining some of the seven leased locations in Nevada.

City National may consolidate some locations, such as the Sun West headquarters at 5085 W. Flamingo Road and the nearby City National location at 6085 W. Twain Ave. Goldsmith said one of the locations could handle an additional $25 million in deposits with no increase in personnel.

The location at 8475 S. Eastern Ave. gives City National its first presence near Henderson. The Eastern Avenue branch "jump-starts you in the part of the community we want to be in," Goldsmith said.

City National doesn't focus on the general consumer market, spokesman Paul Stowell said. However, it does provide consumer-banking services to individuals affiliated with its small-business clients and offers private banking for wealthy individuals. City National manages $36 billion in investments for clients.

"It's going to be very good for the people who bank at Sun West, and it's very good for existing clients (of City National)," Goldsmith said.

The CEO said he has strong ties to Nevada through his wife, Karen, who is a partner in Thomas & Mack Development Group. Goldsmith is a director for Wynn Resorts Ltd.

City National first established a Nevada presence in 2007 when it acquired Business Bank.

City National acquired 1st Pacific Bank of San Diego from the FDIC in May and Imperial Capital Bank of La Jolla, Calif., in December.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.

 

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