Community Bancorp shares slide on quarterly profit loss

Community Bancorp shares plummeted Thursday on the Nasdaq National Market as the banking company reported a second-quarter net loss of $4.6 million and a quantum leap in nonperforming loans.

Shares in Community Bancorp, a Las Vegas-based institution with $1.75 billion in assets, dropped $2.22, or 43 percent, to close at $3 on volume of 1.2 million shares.

Western Alliance Bancorporation shares also took a hit Thursday, shedding 9 percent of their market value even though the bank earned a profit in the second quarter. Shares in Silver State Bancorp, the third publicly held banking company in Southern Nevada, slipped 7.5 percent, although the Henderson-based company hasn't announced second-quarter financial results.

The bank stock sell-off comes during a devastating bear market that has trimmed 70 percent or more of the market value from each of the companies' share prices over the past year.

Community Bancorp reported that its nonperforming loan total jumped to $69.3 million, up from $13.7 million three months ago and $1.3 million a year ago. Nonperforming loans represent 4.6 percent of gross loans, a large percentage in the banking industry.

"The most striking thing was the deterioration in credit quality," said Timothy Coffey, a bank analyst with FIG Partners. "We're basically talking about bad loans."

Coffey also noted that 70 percent of the nonperforming loans are in land developments, which, unlike commercial buildings, produce no income.

"The real fear about that is that the bank would be stuck with the land" and couldn't sell it during a real estate slump, he said.

The bank lost $4.6 million in the second quarter, compared with net income of $5.6 million in the second period last year and $2.7 million in the first quarter this year. The loss per share was 46 cents, compared with earnings per share of 54 cents a year ago.

The second quarter brought relatively smooth sailing for Western Alliance Bancorporation, holding company for Bank of Nevada and other banks in Arizona and California.

Western Alliance reported $2.4 million in net income, down 70 percent from $7.9 million in the same period last year. Earnings per share fell to 8 cents from 25 cents a year ago. The results include a $13.2 million expense for loan loss provisions, compared with $2 million a year ago.

"We have taken advantage of the turbulent market conditions to establish new customer relationships, leading to $152 million in loan growth," Robert Sarver, chairman and CEO, said in a statement.

Shares in Western Alliance fell 98 cents, or 9 percent, to close at $9.90 on the New York Stock Exchange.

Silver State shares fell 12 cents, or 7.5 percent, to close at $1.48 on the Nasdaq.

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