Colonial growth plan counts on consumers

Colonial Bank wants its consumer business in Nevada to grow more quickly than its commercial banking operations this year, but it's not willing to pay a big premium for an acquisition to boost its retail operations.

Currently, consumers account for about 30 percent of the bank's business in Nevada.

Mark Daigle, president and chief executive officer of Colonial's Nevada region, says he'd like to boost that to about 40 percent.

The reason? Diversification.

Although Colonial Bank, which is based in Montgomery, Ala., doesn't break out financial results for its Nevada operations, Daigle said a few days ago that its commercial lending operations grew rapidly last year.

In northern Nevada alone, he said, Colonial made about $200 million in new loans in 2003.

Profitable as that lending has been, Colonial wants to strengthen its consumer business as protection against a downturn in business borrowing.

"You can't be a one-trick pony," Daigle said.

"We're always going to be a strong commercial bank, but we want to grow the retail side more aggressively."

That, in turn, means the company plans to expand its branch network.

In the Reno area, Daigle said Colonial hopes to open two branches one in the southwest area, one in the northwest part of town with at least one of them under construction by the end of this year.

It's unlikely, he said, that the new branches will be inside groceries or discount stores because Colonial prefers the stronger presence of a stand-alone branch.

Those branches would join three one at Park Lane Mall, one in southeast Reno and one in Sparks the company currently operates in the Truckee Meadows.

It also operates branches at Carson City, Fallon and Stateline.

While Colonial considers growth by acquisition, the company is picky about deals.

"We're always looking for acquisitions, but it's got to be a good one.

There's no point paying a premium just to buy someone's assets.

It's got to bring something to the table," Daigle said.

In many instances, he said, the acquisitions proposed to Colonial in Nevada would add about as much in assets as the company could create on its own in a year through organic growth.

"How much of a premium do we need to pay to get one year ahead?" Daigle muses.

The other option internal growth to increase the bank's retail presence will require savvy pricing and promotion along with excellent service, Daigle said, but he has no doubt that service ultimately will prove more important than price.

"We don't want to challenge people to do business with us," he said.

Colonial isn't afraid to tangle with bigger competitors on price free checking, for instance, or hot rates on certificates of deposit but Daigle said bank executives think it's more important to develop longstanding relationships with customers and move away from a transaction-by-transaction relationship.

They recognize, too, that Colonial needs to work hard to get top-of-mind awareness among consumers.

Colonial's operations in Nevada account for about 4 percent of the company's assets.

Along with its northern Nevada branches, the company operates a six-branch network soon to be seven in southern Nevada.

Colonial entered the northern Nevada market five years ago with its purchase of Interwest Bank.

Richard Martucci, the majority shareholder of Interwest, remains on an advisory board for Colonial's Nevada operations.

Two years later, Colonial acquired two locations from Wells Fargo that had been Nevada Banking Co.

and Comstock Bank branches.

Colonial got into southern Nevada through its acquisition of Commercial Bank of Nevada.