Wells Fargo buys Jackson bank
National corporation plans to keep management, most employees.
By Johanna Love
January 18, 2008
United Bancorporation of Wyoming, the state’s largest bank holding company and owner of The Jackson State Bank & Trust, signed an agreement Monday to sell its holdings to financial giant Wells Fargo & Co.
“The timing was right,” said William “Bill” R. Scarlett IV, senior vice president of Jackson State Bank, the town’s oldest and largest bank. “It’s a marriage of the nation’s finest community bank with the nation’s finest national bank.”
Based in Jackson, United Bancorp. has $1.7 billion in assets, 300 employees and five banks – Jackson State Bank, Shoshone First Bank, Sheridan State Bank, First State Bank of Pinedale and United Bank of Idaho – with 13 locations. It was Wyoming’s third-largest privately held company.
The sale agreement is based on an undisclosed cash sum.
The acquisition will mean upgrades for Jackson customers, like gaining fee-free access to a national web of automatic tellers that numbers more than 6,000. Jackson State Bank operated 18 ATMs.
“It was an opportunity to bring forward new products to our base,” Scarlett said. “Wells Fargo has them all.”
Since the valley’s early residents and ranchers founded Jackson State Bank in 1914, the business has become an icon in the community, Scarlett said.
“We would hope that during our term in the ownership, we’ve served our community up to a standard they’d hope for,” Scarlett said. His father, Richard “Dick” Scarlett III, formed United Bancorp. in 1973 and bought Jackson State Bank in 1981. Today, United Bancorp. holds more than $1.7 billion in assets and was recognized in 2007 by American Banker as one of the nation’s “most efficient bank holding companies.” It also was among the top 20 U.S. bank holding companies in highest five-year return on assets.
The deal must be approved by Bancorp. shareholders and banking regulators, but both parties hope the sale will be complete by this spring. United Bancorp. has more than 70 shareholders, including members of the Scarlett and Webster families, other investors and bank employees.
Jackson State Bank is the largest real estate lender in the valley, a title that Scarlett expects Wells Fargo will keep.
“They have the products our customers are looking for,” Scarlett said.
By the summer of 2008, the signs will change, but many of Jackson State Bank & Trust’s 150-plus employees will remain, Scarlett said.
“Wells Fargo’s success depends on retaining good people,” Scarlett said.
Mike Matthews, regional president for Wells Fargo Community Banking in Wyoming, said he hopes “all of the employees at Jackson State Bank stay and become part of the Wells Fargo family.”
“Dick Scarlett and his management team have built a very outstanding banking franchise with lots of talented people,” Matthews said. “We need talented people like everybody else.”
The leadership of the Jackson bank will remain much the same, Scarlett said, with Pete Lawton as president and Scarlett as vice president, but the elder Scarlett will take on a new role, chairman of Wells Fargo Wyoming.
In an e-mail to “friends and neighbors,” Dick wrote that he would assume that role “for a period of time not to exceed 18 months.”
When bank officials told employees the news Tuesday, more than one person shed tears, said Jill Callaway, ATM and merchant services manager.
“People aren’t sure what’s going to happen,” Callaway said, “so they’re not sure how to feel. But many people were emotional. It’s always been the hometown bank.”
Many visitors to the valley want a national banking chain, and employees are trying to stay positive about the sale, she said.
“I don’t think it’s a bad thing,” Callaway said. “With all the services Wells Fargo has to offer, think it’ll be great for the community.”
Bill Scarlett said telling the employees was emotional.
“Change is always hard,” he said. “But the opportunities are enormous, going forward. And the product mix will be a great addition to our markets.”
Wells Fargo is committed to the communities where its banks are, Scarlett said, which led Bancorp. board members to consider the sale.
“It’s a dedication to keep the money where the money is made,” Scarlett said.
As of 2006, Jackson State Bank controlled about 63 percent of the Jackson Hole market, with $732 million in annual deposits, according to the Federal Deposit Insurance Corporation.
After the transaction, Wells Fargo will be No. 1 in both deposits and assets among banks in Wyoming, the nation’s ninth fastest-growing state according to Census data. In Wyoming, Wells Fargo has 18 “financial services stores” and 300 employees; in Idaho, it has 100 stores and 2,000 employees.
“I think it’s a great thing for our customers, our employees and our shareholders,” Scarlett said. “I think the timing is absolutely perfect.”
With the national subprime mortgage crisis deepening, Tuesday was not a good day for Wells Fargo shareholders. The company’s share price fell to a four-year low of $26.49. Wells Fargo is the second-largest American mortgage lender with about $549 billion in assets.
“Obviously our stock price has suffered, but we continue to be very profitable, to grow,” Matthews said. “We’re not going to be unaffected by housing market meltdown nationally. ... But any time an industry goes through an adjustment, the best managed, best capitalized businesses at the end of the day will thrive.”
Wells Fargo bought United Bancorp. not because it was troubled, but because it was successful, Matthews said.
“It was not cheap,” Matthews said. “We’re buying a premiere organization.”
The closest Wells Fargo banks to Jackson Hole are Thayne, Afton and Dubois. Because Wells Fargo did not own a large bank in Jackson, Shoshone, Sheridan, Pinedale or Driggs, Idaho, employee cuts will be minimal, Matthews said.
“There are going to be plenty of job opportunities,” Matthews said.
Although some departments may be eliminated from Jackson State Bank, keeping good employees is good business, he said.
“One of our mottos in a case like this is ‘retain and retrain,’” Matthews said. “If a current employee is interested in staying with the company and is willing, in certain cases, to be trained in a different area, they’re going to get the highest priority.”
The deal should close in about 90 days, and Matthews said it would be another 90-plus days before Jackson State Bank converts to the Wells Fargo system and name.
“We don’t want to rush it,” Matthews said.
Jackson State Bank, even after its name is changed to Wells Fargo, should still have freedom to underwrite community events such as the Easter egg hunt on Town Square that Jackson State Bank has sponsored for 40 years, Matthews said.
“Sometimes what you might think of as a small thing is important to a bank’s image and reputation in the community,” Matthews said. “These banks are community leaders. We want to maintain that.”
Wells Fargo attempts to sell more than one service to its customers, who typically buy 15 to 20 items, from car loans to mortgages.
“Traditional banking is a limited industry, but financial services is a gigantic industry,” Matthews said. “One of our business strategies is to be able to meet all of our customers’ financial needs. We try to make it easy for them to have multiple products and services with us.”
Matthews spoke Tuesday from the Casper airport. He and other Wells Fargo officials will be traveling around the state this week to meet with employees of the United Bancorp. banks and “start to develop relationships.”
“Everyone’s a little stunned,” Matthews said. “We want to make sure they recognize we’re going to take good care of them.”
Bank of Jackson Hole Chairman and CEO Scott Yandell was surprised by the news.
“Jackson State Bank was a fabulous asset for Jackson,” Yandell said. “It was well run, well capitalized, very community oriented. It’s in a way too bad to see Jackson’s original bank no longer being locally owned, to lose an institution like that. But Wells Fargo is a good bank.”
Yandell said it’s too soon to know how the sale will affect the Bank of Jackson Hole.
“From a competitive standpoint, change is always an opportunity,” Yandell said. “We’re still locally owned and we will be the only bank chartered in Jackson. We’re proud of that. We plan to be here for years to come.”
