CARSON CITY — Owners and officers of the Bank of Nevada won an appeal Tuesday allowing the financial institution to continue to operate with its long-standing name despite merging with an Arizona financial institution and giving up its Nevada state charter.
The state Board of Finance, in what might be a first for the panel, heard an appeal involving a decision by the state Commissioner of Financial Institutions.
The board voted to reverse the Feb. 5 decision by Commissioner George Burns who determined that letting the bank keep the Nevada bank name would be misleading and create confusion among Nevada consumers.
The Bank of Nevada merged with Phoenix-based Western Alliance Bank on Dec. 31, 2013, and the Bank of Nevada surrendered its Nevada bank charter.
Burns required the bank to operate under the name of Western Alliance Bank because it is now operating under an Arizona state charter and not a Nevada charter. Nevada state law prohibits a non-Nevada chartered bank to use Nevada in its name, he said.
But members of the Board of Finance said more confusion would be created by requiring a name change and reversed the decision after a two-hour hearing.
Las Vegas attorney Robert List, a former Nevada governor representing Nevadans involved with the Bank of Nevada and Western Alliance Bank, argued that there was no real change as a result of coming under the Arizona bank charter.
The Bank of Nevada was founded in 1994 by Nevada residents, including Bill Boyd and others who are still involved in its operations, he said.
“The ownership hasn’t changed at all,” List said. “Nothing substantively has really changed here with this transition.”
The two institutions merged 19 years ago and the Bank of Nevada remained a Nevada chartered bank, List said. Of the 13 board members of the holding company, the Western Alliance Bancorporation, seven are Nevadans, he said.
The Bank of Nevada decided to surrender its Nevada charter to simplify its operations with the Arizona bank and a California bank that also operates as part of the Western Alliance Bancorporation holding company, List said.
But David Pope, a senior deputy attorney general representing the Financial Institutions Division, argued it is not the same bank. The Bank of Nevada charter is gone and there is no longer a bank named Bank of Nevada, he said.
The state statute is clear that a non-Nevada chartered bank cannot use a name like Bank of Nevada because of concerns it could confuse consumers, Pope said.
Only three members of the Board of Finance — Treasurer Kate Marshall, Controller Kim Wallin and public member Steven Martin — heard the appeal. Gov. Brian Sandoval and public member David Funk did not participate.
List said the real confusion for Nevada consumers would come about if the bank had to change its name. The name Bank of Nevada is trademarked, but if the decision by Burns was affirmed, it could not be used, he said.
Nevada consumers would wonder who runs the bank and whether their debit cards will still work if the name was required to be changed, List said.
Boyd said after the meeting that the board made the right decision.
“Speaking as a longtime Nevadan, I wouldn’t want to see the name Nevada taken away from us,” he said. “We think our 35,000 customers will not be confused because the name has been left where it appropriately belongs.”
But Burns said the decision will now allow Nevada chartered banks to merge with institutions outside of the state and still use Nevada in their name. It also does away with the incentive for a bank to get a Nevada charter since the name Nevada can be used without such authority, he said.
“It totally undermines the funding basis for the Financial Institutions Division,” Burns said. “Now that we don’t have the incentives to get a charter or keep your charter, at least 50 percent of my funding for my operation could disappear.”
Bank of Nevada has 11 offices, 400 employees and 40,000 bank accounts with Nevadans and Nevada businesses, List said. It has $9.8 billion in assets.
Contact Capital Bureau reporter Sean Whaley at firstname.lastname@example.org or 775-687-3900. Follow him on Twitter @seanw801.