Lower purchase price negotiated for Service1st Bank of Nevada

Western Liberty Bancorp on Monday said it and Service1st Bank of Nevada agreed to a lower purchase price for the Nevada bank.

The New York-based bank holding company agreed to pay book value, the value of the bank’s capital, which was $21 million at the end of the first quarter. In September, the buyout was pegged at 1.2 times book value, but the new offer is said to be a better-than-average acquisition price for a bank given the weak economy.

The 240 shareholders of Service1st also may receive a 20 percent premium based on the total of capital at the time of closing.

Like other Nevada-based banks, Service1st has been losing money in recent quarters, and analysts say that affects its value to a buyer.

Western Liberty will add $25 million in new capital to the bank, up from the $15 million announced.

“Anyone that is willing to invest $25 million in a Southern Nevada bank has a lot of confidence in the prospects for recovery in Southern Nevada,” said William Martin, chief executive officer and vice chairman of Service1st Bank.

Western Liberty Chairman Jason Ader said in a call, “Nevada is one of the greatest opportunities in America right now. Nevada’s economy is going to come back, and it’s going to come back stronger than ever before.”

After acquiring Service1st, Western Liberty intends to grow through acquisitions, including banks that are seized by regulators, according to the company’s 10-K annual report.

Not only could these acquisitions be attractively priced, but the holding company could buy a failed bank’s loan portfolios through loss-sharing agreements with the Federal Deposit Insurance Corp.

Under some recent agreements, the FDIC insurance fund has agreed to absorb 80 percent of potential losses from bad loans, limiting the risk for the acquiring institution.

Western Liberty and other banking companies don’t share profits with the deposit insurance fund.

“That’s one of the strategies we may pursue,” Ader said. “We may acquire banks that aren’t failing.”

Ader said many small community banks are viable but struggling and may be candidates for a buyout.

The bank also intends to grow by making loans in Nevada, Ader said.

“Our goal is to be one of the biggest most important banks in Nevada,” Ader said.

Western Liberty is backed by several institutional investors. Fidelity Management and Research Co., the giant mutual fund company, owns 34 percent of Western Liberty’s outstanding shares and is the largest investor.

Martin will become CEO of the holding company when the transaction closes. However, John Gaynor, president of Service1st, is retiring through an agreement described as amicable.

Chief Financial Officer George Rosenbaum is expected to be named to replace Gaynor.

The company hopes to complete the acquisition of Service1st by September, but it must wait for regulatory approval, Rosenbaum said.

Western Liberty, which has no present operations, last traded at $6.25 on Friday on the Over-the-Counter Bulletin Board.

Contact reporter John G. Edwards at or 702-383-0420.

News Headlines
pos-2 — ads_infeed_1
post-4 — ads_infeed_2
Local Spotlight
Home Front Page Footer Listing
You May Like

You May Like