News Column

Bank CEO: Merger Is Win-win for Employees, Customers

Dec. 3, 2012

Bruce Krasnow

The First National Bank of Santa Fe has been a "bedrock of the community" since 1870, and it is not going anywhere, the bank president and CEO said Friday.

Gregory J. Ellena said the financial holding companies of First National and Strategic Growth Bancorp of El Paso have agreed to merge, and the new entity will provide more financial opportunities for both employees and customers.

Ellena emphasized that all employees will remain, and the terms of all loans, mortgages, trusts and deposits won't change.

He said First National Bank of Santa Fe is the oldest continuously operating bank in the Southwest, and all the executives are committed to that tradition. "We have not had one month of operating losses," Ellena said, and the arrangement "is not a buyout, it's a combination" of assets and resources.

The larger financial entity will be able to give the bank's 20,000 customers more access to investment products as well as a regional footprint stretching from El Paso to Denver. All 11 First National offices in Santa Fe, Albuquerque, Eldorado and Denver will remain, he said. The transaction gives First National customers access to services of a big bank -- especially upgrades to technology -- with the feel and personality of what has become the First National trademark, said Ellena, CEO since 2005.

Strategic Growth has ties to Santa Fe, as it's headed by William D. Sanders, whose Security Capital Group was started here in 1991 and then sold to a multinational corporation. His son, Pablo Sanders, co-founder and managing director of operations, is a 1995 graduate of Santa Fe Preparatory School.

William and Pablo Sanders formed Strategic Growth in 2009 and have raised some $250 million from investors, according to the El Paso Times, which published an April profile on the firm. Pablo Sanders has an MBA from Harvard and was recently featured in a photo while attending a 2011 New York City alumni reception for Prep, according to the school's newsletter.

"All the bankers are watching them and talking about them," El Paso banker Les Parker told the newspaper. "Bill's [Sanders] hobby is business. He's really good at it. I'm sure if he gets his teeth into something it will be an interesting proposition."

Pablo Sanders told the newspaper that Strategic Growth Bancorp wants to provide loans and financial services through community banks that can keep their local names and decision-making autonomy. The El Paso-Las Cruces region and New Mexico are growth corridors -- especially for Hispanics. "If you look at the demographics and growth, this is where you want to be building a business," he said.

The 200 bank employees were notified of the proposed merger Friday, and the 50 shareholders will have a chance to vote Dec. 21, Ellena said. The company also has an Employee Stock Ownership Plan that holds 10 percent of the equity -- and those employees will be paid for their shares, said Laura Altomare, vice president and marketing manager for the bank.

First National Bank of Santa Fe has been in its downtown Santa Fe building on the Plaza since 1954 and just completed a $5 million remodeling. "Big banks don't care about this community," Ellena said. "We care about this community."

Ellena declined to discuss the board or governing structure of First National's holding company, New Mexico Banquest Corp., if the transaction is finalized. First National has some $92 million in deposits and total assets of $760 million, and Strategic Growth Bancorp is aiming to be worth $3.5 billion under its strategic plan, according to the New Mexico Business Weekly.

Strategic Growth's William Sanders is a real-estate investor with ties Chicago and El Paso. His firm acquired Bank of the Rio Grande in Las Cruces, with three branches and $82 million in deposits in June 2011, and is raising up to $200 million for bank acquisitions in the Southwest, according to St. Charles Capital, an investment banking firm that covers the industry.

After making his fortune in Chicago, Sanders came to Santa Fe and launched Security Capital Group in 1991, which was sold in 2002 to GE Capital -- a deal estimated at $5.4 billion. Sanders still owns ranch land in the Lamy area valued at $60 million.

Sanders next started Verde Realty in 2003, which purchased 21,000 acres along the New Mexico-Juarez-El-Paso border -- along with water rights -- with the vision of building a residential community. Those plans were plagued by missteps and delays, and Verde abandoned the project. The company itself was recently purchased by a Canadian real estate fund for $13.88 a share this summer, when many shares were priced as high as $33 between 2003 and 2007 -- and at $17.95 in early 2012, according to The Wall Street Journal.

The Santa Fe transaction will undergo review by the Federal Reserve, with a chance for public comment. If that process moves along, it would be completed in mid-2013. The New Mexico Banquest Corp. board has already agreed to the deal. The subsidiary companies, Santa Fe Advisors and Santa Fe Insurance Services, also will continue to operate and retain their names, Ellena said.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: (c)2012 The Santa Fe New Mexican (Santa Fe, N.M.) Distributed by MCT Information Services

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