R.C. Willey Home Furnishings, under the auspices of its parent company, Berkshire Hathaway Inc., has submitted an application to start an industrial bank in Utah.
If approved, Berkshire Hathaway Bank's primary focus will be on providing consumer financing for R.C. Willey's products, according to Michael Boswell, R.C. Willey executive vice president.
The move to an industrial bank is largely an effort to consolidate the furnisher's in-house consumer credit operation, which has grown increasingly complicated as the company expanded, Boswell said. In addition to its stores in Utah, R.C. Willey also has a store in Meridian, Idaho; two in the Las Vegas market; one under construction in the Reno, Nev., area; and sites under consideration in California.
"This way, we can consolidate under one entity, and simplify the way we offer consumer credit to our customers," Boswell said. "And we can simplify our operations here."
The bank initially will not need to bring on new employees but will utilize R.C. Willey's consumer financing staff of 65, Boswell said. Nor will it be moving from R.C. Willey's current offices at 2300 S. 300 West. Structural modifications will be made to comply with Federal Deposit Insurance Corp. requirements, Boswell said.
R.C. Willey did not disclose information indicating the asset size of its proposed bank, but Boswell said that "in comparison to the other Utah industrial banks, it would be relatively small."
Industrial loan corporations, or industrial banks, function much like commercial banks in that they can offer commercial and consumer loans, issue credit cards and offer financing for auto purchases. Most industrial loan banks are owned by financial services companies or other corporations. Only a handful of other states — California, Nevada and Colorado among them — have
charters to host industrial loan banks.
Of Utah's 29 industrial banks — which total $115 billion in assets — Merrill Lynch is by far the largest, at $66 billion.
For now, the bank's activities will be limited to R.C. Willey and a few third-party businesses, such as Big-O Tires, for which R.C. Willey handles financing operations. But the bank is named after R.C. Willey's parent company, the behemoth conglomerate Berkshire Hathaway, and Boswell did not discount the possibility that Berkshire Hathaway Bank may one day include some banking functions of other subsidiaries.
According to its Web site, Berkshire Hathaway includes 40 subsidiary companies, including R.C. Willey, See's Candies and General Re.
Darryle Rude, supervisor of industrial banks at the Utah Department of Financial Institutions, said the department received Berkshire's completed application Monday. An application also has been filed with the FDIC. Typically, the evaluation process takes four to eight months to complete.
Edward Leary, commissioner of the department, did not comment on the application specifically, but he said Berkshire's request for consideration "reflects continuing interest on the part of companies, both local and national, in establishing industrial banks in Utah."
Which, he said, is a good thing.
"It means jobs, economic development and continuing support (to the notion) that Utah is a financial services center," Leary said.
Boswell said the state's charter was a key factor in deciding where to consolidate its operations. But he said it wasn't the only factor.
"Here in Utah, we have very preferential fees and rates in the financial industry," Boswell said. "Obviously, that's the reason why Utah is the primary state in which to form industrial banks. Beyond that, however, this is also the headquarters of R.C. Willey, so it's natural for us to apply in the state that's been home to us for so long."
E-mail: jnii@desnews.com