Community Bancorp still hampered by problem loans

Community Bancorp of Las Vegas slowed the financial bleeding from bad loans during the third quarter, but the company late Wednesday reported that problem loans continued to grow.

The $1.76 billion asset holding company for Community Bank lost $3 million in the third quarter, down from $4.6 million in the second quarter. The company earned $5.5 million in the third quarter last year. The loss per share was 29 cents, compared to a loss of 46 cents in the second quarter and earnings of 53 cents in the third quarter last year.

Shares in the company fell 78 cents, or 19.7 percent, Thursday to $3.18 on Nasdaq Global Select. Volume was 271,491 shares, or roughly four times the average trading volume.

Edward Jamison, chairman and chief executive, told analysts that the bank's problems stemmed from the sagging economy.

"Today, while population growth continues, job growth has been significantly slowed," Jamison said.

Nonperforming loans totaled $196.2 million, up from $80.3 million at the end of the second quarter and $12.1 million at the end of 2007.

"The dramatic increase of nonperforming loans is reflective of our markets and also our strategy to be aggressive in identification of problem credits through strong collection management," Jamison said in a statement.

The bank typically only made loans for 50 percent to 60 percent of market value on land, giving it protection against declines in property values, he said.

Jamison counted 13 loans totaling $147 million that comprise 80 percent of the banking company's problem loans. He outlined plans for foreclosing on the real estate collateral for the loans by January or earlier.

"We believe that in this current cycle, upon default, we are better served to foreclose and obtain clear title to the property and remarket to a qualified borrower as soon as practical," he said.

The company has conducted appraisals, studied market conditions and estimated the costs of selling properties.

"We believe, based on expressions of interests from others, that the values (of loan collateral) are holding up very well," Jamison told an analyst who questioned whether Community set aside enough in reserves for loan losses.

Community reported that 55 percent of its loans were for construction projects and land, with 27 percent being non-real estate commercial loans.

The bank has seen customers shift some of their deposits to larger banks, based on the assumption the other banks were "too big to fail," but Jamison said it has increased the number of customers.

In addition, some of the diverted deposits have returned to Community Bank since federal deposit insurance maximums were increased to $250,000 for interest-bearing accounts and made unlimited for noninterest-bearing accounts, he said.

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