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SALT LAKE CITY (AP) -- Billionaire investor Warren Buffett's Berkshire Hathaway company plans to operate a Utah industrial bank to handle consumer loans for its R.C. Willey Home Furnishings stores.
The proposed bank, which is subject to regulatory approval, would be known as Berkshire Hathaway Bank, and would be based out of R.C. Willey's corporate offices in Salt Lake City.
"This represents the next step in R.C. Willey's expansion," Michael Bosworth, R.C. Willey's executive vice president, who will be the bank's president and chief executive. "It offers us a way to bring our financing activities under the umbrella of a single entity" that can operate easily across state lines.
In addition to its stores in Utah, R.C. Willey also has a store in Meridian, Idaho, two in the Las Vegas area, one under construction in the Reno, Nev., and sites under consideration in California.
When R.C. Willey finances purchases for its customers outside of Utah, it now does so under credit regulations of those states. By owning a Utah-based industrial bank with federal deposit insurance, R.C. Willey can offer credit terms at all of its stores that are uniform and based upon Utah law.
The bank initially will not need new employees and instead will use R.C. Willey's consumer financing staff of 65, Boswell said.
In addition to R.C. Willey's financial operations, the bank also would handle those of a few third-party businesses, such as Big-O Tires, for which R.C. Willey handles financing operations.
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.
Utah has 29 industrial banks.
Darryle Rude, supervisor of industrial banks at the Utah Department of Financial Institutions, said the department received Berkshire's application Monday. An application also has been filed with the FDIC. Evaluations usually take four to eight months.
(Copyright 2005 by The Associated Press. All Rights Reserved.)
