People at heart of bank growth

The numbers support Stan Wilmoth's contention that Heritage Bank of Nevada is doing something right.

On March 31, the Reno-based bank reported to the Federal Deposit Insurance Corp.

that its assets had grown to $123.1 million from $78 million a year earlier.

Net income grew even faster to $241,000 in the first quarter compared with $123,000 in the same period a year earlier.

In 2002, the bank reported net of $743,000 compared with $519,000 a year earlier.

Wilmoth, president and chief executive officer of Heritage, believes the bank's performance almost entirely reflects its fervent belief in personalized service.

Every new customer, for instance, gets a personal note from Wilmoth.

"We're trying to do relationships," he said a few days ago.

"People bank here because of people.

They don't bank here because of Heritage Bank."

The challenge for Wilmoth and his management team, then, is to protect that relationship-oriented banking even as the institution grows.

In the next few weeks, Heritage Bank will open its fourth branch, a location at 7th and Keystone to serve northwest Reno.

That branch will join locations in Damonte Ranch and Carson City along with Heritage Bank's main office at 1401 S.

Virginia.

Wilmoth said a fifth branch this one in Sparks is under consideration.

The key to maintaining the Heritage Bank culture in new branch locations lies in finding the right employees, Wilmoth said.

The bank often looks for employees who are experienced in smaller community banks because they haven't learned the bureaucratic habits of bigger institutions.

"When you come to Heritage Bank, you're going to talk to someone," Wilmoth said.

"You're not going to get a 1-800 number."

Employees also get the gospel from Wilmoth about the need to shoot straight with potential borrowers: "Bankers sometimes forget that these are families they're dealing with.

Please tell them what the answer is.

Don't leave them hanging.

If the answer was 'no' on Day 1, tell them on Day 1.

Tell them what the problem is." The bank's executives do everything they can to empower its 41 employees to address customers' problems immediately.

Branch managers have autonomy to work with customers and the responsibility to meet financial goals just as if the branch were a free-standing institution.

Knowing your customers pays off in more than warm fuzzy feelings about the bank.

In 2001 and 2002, the bank wrote off only about $10,000 in bad loans, and its non-current loans on March 31 totaled all of $12,000.

Even as Heritage Bank works to protect the culture that helped it to grow, it also is shoring up its capital to provide a solid base for future growth.

Its loan portfolio on March 31 totaled $79.78 million compared with $52.8 million a year earlier, according to the FDIC.

That means that the bank's equity capital was equal to 7.1 percent of its assets.

Although that's a healthy figure, the bank's equity stood at 9.7 percent of assets before the last year's strong growth in lending.

Although the bank hasn't paid dividends to its 360 shareholders most of them from northern Nevada since it opened in late 1995, the retained earnings aren't enough to keep up with the demands of growing loan portfolio.

That's why the bank this year created a holding company Heritage Bancorp to provide some financial flexibility in adding additional equity capital.

Creation of the holding company isn't designed to dress up the bank for a potential suitor.

"We didn't build this bank to sell," Wilmoth said.