Competitors will be able to use the ''locally owned'' argument

SALT LAKE CITY - Community banks gearing up to compete with Wells Fargo after its planned acquisition of First Security Corp. will be able to trot out the ''we're locally owned'' argument.

Ironically, that was the argument being used just two weeks ago by Spencer Eccles, First Security chairman and chief executive officer, in extolling the planned merger with Zions Bancorporation.

But that deal fell through - rejected by Zions shareholders - and on Monday it was announced that Wells Fargo & Co. plans to purchase First Security for $3.2 billion.

This merger would leave Eccles with little control over the company his family founded in 1928. While Eccles would join Wells Fargo's board, he would have no day-to-day management responsibility. In the failed deal with Zions, Eccles would have shared the CEO title with Zions CEO Harris Simmons until May 2002.

Under the new proposal, First Security's Utah operations would be controlled by San Francisco-based Wells Fargo, the nation's seventh-largest banking company.

''This is a different approach, but it is a good approach,'' Eccles said Monday of the agreement with Wells Fargo.

Wells Fargo promises that once its purchase of First Security is complete, it will operate in Utah as if it were locally owned and controlled.

Wells Fargo's modern ties to Utah go back just five years when it acquired First Interstate, which had 32 branches in Utah. It then rid itself of eight Utah branches in smaller communities, selling many of them to Zions.

The proposed merger may mean closure of some First Security branches, particularly in the Salt Lake City area where about a half dozen Wells Fargo officers are within three blocks of First Security branches. To gain regulatory approval, Wells Fargo estimates it also will have to sell $1.2 billion of deposits and loans.

The state's community banks are gearing up for a competitive battle with the enlarged Wells Fargo for Utah customers.

''We are going to have to sharpen our pencils to keep up with them,'' said Curtis Harris of Barnes Banking Co., Kaysville. ''For a large bank they do a good job of reaching out to customers.''

Zions' Simmons said, ''We have been competing with Wells Fargo, Bank of America and other national competitors for a long time. We have been successful and are not going to change our game plan.''

Scott Earl of the Utah League of Credit Unions, said, ''It could be that one of our biggest competitive advantages in the future will be that we remain locally owned and operated.''

Following the announcement, First Security shares closed Monday at $13.38, up $1.19, and Wells Fargo shares closed at $39.50, down 25 cents.