Problem loans hurt First National


The real estate bust is hammering banks in the state, but First National Bank of Nevada, an affiliated bank in Arizona and their holding company are getting dinged more than most.

"A number of other financial institutions are facing the same issues, and we are doing the same things that other financial institutions are doing," said Joel Gottesman, executive vice president and chief administrative officer of the banks.

First National's banks are working to raise capital and reduce the size of the balance sheet, he said.

Raymond Lamb is board chairman of the family-owned banking company.

First National Bank Holding Co., a $4.6 billion-asset company based in Scottsdale, Ariz., reported a first-quarter loss of $140.4 million, compared with profit of $9.1 million last year, according to the Federal Deposit Insurance Corp.

Most of that stemmed from its $2.8 billion-asset First National Bank of Arizona, which reported $131.3 million in first-quarter losses compared with profit of $1.8 million in the first period last year.

Nonaccrual loans at the Arizona institution totaled $260 million, compared with $50 million a year ago.

Bankers classify loans as nonaccrual when the borrower has defaulted on interest or principal payments or is expected to default.

The $1.6 billion-asset Nevada bank employs 210 workers at 11 branches around the state. The Nevada institution reported a first-quarter loss of $7.3 million, compared with $6.8 million in profit in the same period last year.

Problem loans weighed on the Nevada bank's performance. It reported $62.1 million in nonaccrual loans, compared with $231,000 in nonaccrual loans at the end of the first quarter last year.

Looked at another way, nonperforming loans and loans more than 90 days past due equaled 4.28 percent of total assets at the Nevada bank, up from 0.61 percent at year-end and a miniscule 0.02 percent a year ago.

At the Arizona bank, nonperforming loans and loans 90 days past due totaled a 10.92 percent of assets, which bankers privately call staggering.

Banks in Nevada and around the country generally have been suffering from the credit crunch and real estate crisis, the FDIC reported Thursday.

"To sum up, while we may be past the worst of the turmoil in financial markets, we're still in the early stages of the traditional credit stress you typically see during an economic downturn," FDIC Chairwoman Sheila Bair said in a statement.

In Nevada, the FDIC counted 32 state-chartered banks with a total of $85 million in net income for the first quarter, compared with $129 million in the first quarter last year. (First National is a nationally chartered bank.)

Nevada state-chartered banks reported nonperforming loans increased to 1.96 percent as a percentage of total loans in March, up from 0.41 percent at the end of the first quarter last year.

Nationally, net income for commercial banks and savings institutions dropped 45.7 percent in the first quarter to $19.3 billion, down from $35.6 billion in the same period last year.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.