One of the lingering issues the recession has left behind for businesses, think tanks and politicians to contemplate is how Southern Nevada can truly diversify its economy to protect itself from the negative impact of the next economic downturn.
John Guedry, president and COO of Bank of Nevada, believes some of the answers are to be found in a recent report by the Brookings Institution that calls on the region to develop clusters of new industries, including technology and health care.
"I think we have a chance of actually developing those (industry) clusters like Brookings talks about," Guedry said. "We are already beginning to see a little bit of growth in the technology sector. I think companies like Switch can help us grow that sector."
Guedry is accustomed to dealing with economic and professional challenges. He has close to 30 years experience in the financial services industry in Southern Nevada, including seven years with Business Bank of Nevada, where he was president and CEO before City National Bank's acquisition in 2007 for $164 million.
After graduating from the University of Nevada, Las Vegas in 1982, Guedry worked for Valley Bank of Nevada, owned and operated Real Estate Investment Services, a mortgage brokerage firm, then held senior management positions at Nevada Title Co. and CB Richard Ellis. He joined Bank of Nevada in August 2011.
"I've always had great respect for the bank, so it was an easy decision when they offered me the position," Guedry said.
Guedry says challenges remain in the banking business.
"Being able to grow our business model in this very challenging economy," he said. "I know the popular feeling is banks aren't lending, but the reality is borrowers aren't borrowing, and for good reason."
He said there isn't a demand the for loans when the last thing a company wants to do is take on more debt and when there may not be the business to support it.
"So demand for loans is down ... that is how most of us are profitable, by making loans," Guedry said.
Question: What attracted you to a career in banking?
Answer: Actually, it kind of found me. I wasn't sure what I wanted to do out of college when I went to work for a financial group (Associates Financial Services) in Indiana that had offices around the country, including here in Las Vegas. They transferred me to Northern California to run one of their offices. I did lending on farms and agricultural equipment for a couple of years in Stockton. After a couple of years, my wife, whose family is from Las Vegas, and I decided it was time to come back and I went to work for Valley Bank.
Question: Why take a break from banking to work at CB Richard Ellis?
Answer: In part it's because it's one of the types of businesses banks have supported here for decades. Real estate is a big one. It was either gaming or real estate. That short seven- or eight-year period when I was doing commercial real estate loans. I had an affinity for it. I wound up partnering with a few clients to build projects and liked it. I thought it was fascinating. When we sold the bank to City National, I really didn't know if I wanted to stay in banking or try something different. CB is a great company with a great reputation. They were looking for a managing director, I wasn't sure what I wanted to do, so I said sure, I'll give it a try.
Question: Describe Bank of Nevada's business model.
Answer: It is one of the largest state-chartered banks in Nevada that works with the business community. Our business community is located here in Southern Nevada. We just reached a $1 billion in assets, which is a good-size bank. We are an affiliate of Western Alliance Bancorp in Phoenix ... that gives us a regional presence here. We work very closely with our regional partners.
Question: What are some other benefits of being a subsidiary of a bank holding company?
Answer: It gives you much more capacity in terms of size of credit relationships you can manage. With the bank I was with, with $500 million in assets, our legal lending limit was $10 million to $12 million. A bank this size working with our partners, it's a $100 million capacity. It does open the door for larger clients to be able to work with us. I think that's helped us better serve the community. The decision making is done here, we know the challenges of the community and yet we have all the capabilities of a much larger national bank that really doesn't have that decisionmaking in this market.
Question: Are needs and challenges the same thing in today's banking business?
Answer: In some cases, yes it is. An example of a need that might not necessarily be a challenge is a company like Switch, which I can mention because they are a client and have been part of our moving forward campaign. Switch didn't necessarily need Bank of Nevada, but they need availability of capital to grow their business plan and execute their business plan. They certainly have multiple resources they can go to both in state and out of state given the success of that company, but it's helpful to be able to work with companies like ours and Nevada State Bank and others that have been there to serve them. We are better able to serve them because we know what they are doing in this community, we understand the company (and) we know the players behind the company. So that's a need that they have.
Question: I assume it's quicker access to capital because you are a local bank?
Answer: Quicker might be the right word; maybe less complex access because you don't have to go through so many hurdles because we understand them better.
Question: What are the challenges for a bank this size?
Answer: Being able to grow our business model in this very challenging economy. I know the popular feeling is banks aren't lending, but the reality is borrowers aren't borrowing and for good reason. When there isn't a demand, the last thing you want to do is take on debt and be responsible for servicing that debt when there may not be business to support it. Viable businesses, businesses that have weathered through this really tough time, they get it that it's not necessarily the best time to be expanding their business. So demand for loans is down - that is how most of us are profitable, by making loans. But I would say the greater challenge is generally affecting all of us is this malaise in the economy - the feeling that we aren't quite sure when things are going to get better, so we are just going to wait and see. So until our confidence comes back the demand for goods and services ultimately leading to more jobs starts to come back, we are going to continue to see that challenge.
Question: Do you face different challenges because you're in Nevada?
Answer: Yes, we do. Part of the challenge is that we don't have a diverse economy or a diverse economy like we would want to have, and so when we see our major economic driver - gaming - go through the challenges its gone through the last four years, it ripples through the entire economy and there really isn't anything else to pull us back until that engine gets going again. Hopefully we are on that path. But that has been a long process to even see some light at the end of the tunnel.
Question: We've bet on gaming, but why hasn't it happened in other industries?
Answer: I will say that's very true. I've lived here 38 years and worked here for almost 30 years, and so I've seen that. What I will say we are starting to see a few differences, which I'm pretty bullish about. This is the first time in 30 years I've seen an organized, and what could be a very effective, economic development plan that wasn't just a report that someone produced to put on a show. It's actually been read, discussed and debated. Maybe it's because of the crisis we've been through that people are more motivated now than we've ever been.
Contact reporter Chris Sieroty at email@example.com or 702-477-3893.