Local bank stocks slide

If your banker is grumpy, this may be why.

The value of bank stock holdings plummeted by millions of dollars this year for the chief executive officers of the three publicly held bank holding companies based in Southern Nevada.

Shares controlled by Robert Sarver, chairman and CEO of Western Alliance Bancorp, tumbled 33 percent or $28.8 million. His stocks now have a total value of $57.5 million, excluding stock options.

Western Alliance is the holding company for Bank of Nevada and banks in California and Arizona.

Corey Johnson, CEO of Henderson-based Silver State Bancorp, has lost roughly 29 percent of the value of the shares he holds in Silver State. That's a $2.2 million plunge, giving the shares a total value of $5.5 million.

Ed Jamison, chairman and CEO of Community Bancorp, has been riding the queasy downslope of the stock market roller coaster, too. Since his last stock purchase in early January, the value of his shares in Community Bank have dropped by $1.4 million or 21 percent. His stock, which is held by a family trust, is worth $5.5 million now.

Fortunately for the CEOs, their loses exist only on paper so far.

They can take cold comfort in knowing that Wall Street bears tore a hole in the market value of many companies, as demonstrated in the 2.3 percent drop in the Dow Jones industrial average and Standard & Poor's 500 on Thursday.

The Nasdaq Bank Index was off 1.8 percent or 52.58 and closed at 2928.17 on Thursday. It has fallen 14.7 percent for the year to date.

Bank stocks around the country are suffering as investors grow more concerned about the implosion of the subprime home loan market and increasing numbers of home foreclosures.

Western Alliance has no direct exposure to subprime residential loans, but the banking company is feeling an impact from subprime loans at least indirectly, Chief Financial Officer Dale Gibbons said.

About 20 percent of home purchase loans in Southern Nevada are subprime, meaning the borrowers have below-standard credit. Because of the collapse of the subprime market, the availability of those types of loans has disappeared, effectively freezing out 20 percent of home buyers in the Las Vegas area, Gibbons said.

Nevertheless, Gibbons points to the 40 or so construction cranes operating on the Strip as an indicator that Las Vegas' long-term economic prospects remain bright.

Southern Nevada bankers, meanwhile, are responding to stock market problems.

Community Bancorp late Wednesday signaled that it wants to take advantage of its lower stock price by buying back shares. The bank's board authorized repurchasing up to 5 percent of its outstanding shares over the next 12 months. That would cost $12.4 million at Thursday's closing price for 521,000 shares.

Some of Western Alliance's biggest insiders are demonstrating confidence in the company based on their stock purchases.

Sarver bought 40,000 shares on July 20, increasing his total holdings to 2.5 million shares.

William Boyd, chairman and chief executive officer of Boyd Gaming Corp., also is a major shareholder in Western Alliance. He bought 100,000 shares in two transactions during July, bringing his total holdings to 1.6 million shares of the bank holding company.

Western Alliance separately has trimmed financial incentives for officers, because the banking company didn't meet targets for earnings per share, loan growth and deposits, Gibbons said.

Because of a previously reported loan loss at an acquired bank, Western Alliance also is requiring larger loans to be approved by either a senior officer or committee of officers, rather than only one lower-level officer.

Wall Street seems less bullish about the bank holding company.

Western Alliance shares fell $1.47, or 6 percent, Thursday to close at $23.05 on the New York Stock Exchange. Community Bancorp was off 37 cents, or 1.53 percent, closing at $23.80. But shares in Silver State rose by 5 cents, or 0.27 percent, to $18.55.

Gibbons said that Western Alliance still trades at a higher multiple of earnings than the other two banking companies. Western Alliance is selling for 15.7 times forward earnings estimates while Community Bancorp has a 10.5 forward price-earnings ratio. Comparable price-earnings ratios aren't available for Silver State, but it would have 10.5 price-earnings ratio if its second quarter earnings continue unchanged.

Silver State reported a 20 percent increase in second-quarter net income Wednesday night. Net income rose to $6.2 million from $5.1 million. Earnings per share climbed to 44 cents from 37 cents a year ago.