Local lenders stress that they played no part in Wall Street chicanery

If local bankers decided to march together under a single banner, it might well read, "We're not Wall Street."

Whenever they can, they try to drive home the point that local bankers largely stuck to the traditional business of taking in deposits and making loans, never gorging on exotic derivatives or shorting their own customers. Yet, they concede they have made little headway in separating themselves from the likes of Goldman Sachs or the failed Lehman Bros. as argument over the causes of the recession focuses just on "banks."

"Does the country at large understand the difference between an investment bank and a commercial bank? No," said Kirk Clausen, Nevada regional president of Wells Fargo Bank. "We can't do anything about that."

Numbers back up the anecdotal evidence. The annual Gallup poll on the Honest and Ethics of Profession published in December showed that 33 percent of respondents rated bankers as low or very low, more than double the 15 percent of just two years earlier.

The outlooks shared by the 10 bankers included in this year's Who's Who of Banking don't hold much promise for near-term improvement. The most optimistic view puts the start of a sustained rebound in the Las Vegas economy at a year from now, and even then only at a tepid pace. Recovery in real estate, long among local mainstays with tourism and conventions, could take years to recover.

"I don't think anybody thought that Las Vegas would be as badly hit as it was," said Arvind Menon, president and CEO of Meadows Bank.

As long as conditions look difficult, the main friction point could well continue. Business owners and speakers at seminars consistently knock the banks for effectively slamming the vault door shut when they need it open the most.

But the bankers respond that many businesses, with depleted balance sheets and slim or no profits, simply cannot qualify for loans. Regulators' heightened scrutiny of bank finances amid the record wave of failures, with five valley banks having been seized in the past two years, has further limited what they can do.

KATHY PHILLIPS

President and CEO, Nevada Commerce Bank

Question: At what point is Las Vegas in the economic cycle?

Answer: Some of our clients are starting to see small signs of stabilization in our market. We hope that Las Vegas real estate values will start to improve. Our concern is still unemployment and how that affects so many.

Question: When will we see a sustained rebound in business lending?

Answer: I wish I could answer that with certainty. We would love to start that trend now. However, it appears that business owners will not be seeking loans until they are confident that the economy is on the mend.

Question: What has been the major lesson of this recession?

Answer: I believe business, including banks, will be more conservative. Many of us have never seen economic pressure of this magnitude and it will be remembered for generations.

LARRY CHARLTON

NEVADA REGIONAL EXECUTIVE, CITY NATIONAL BANK

Question: At what point is Las Vegas in the economic cycle?

Answer: If I ranked it on a scale of one to 10, with one the worst, I would say it's about a three. But it is climbing slowly. We've seen the worst, but we will see up and down fluctuations as the overall trend is upward. I think we will return to normalcy at the end of 2011, but we are never going to get back to where we were.

Question: When will we see a sustained rebound in business lending?

Answer: We have money to lend but we don't see loan demand increasing.

Question: What has been the major lesson of this recession?

Answer: Diversify your portfolio and really mean it. Also, you continuously need to perform stress tests to ensure that you have capital commensurate with the risk.

PETE ATKINSON

PRESIDENT, VICE CHAIRMAN, BANK OF LAS VEGAS

Question: At what point is Las Vegas in the economic cycle?

Answer: We are near the bottom, but I don't see much recovery this year or before the end of 2011. I believe we are going to follow not only the national economy but the global economy.

Question: When will we see a sustained rebound in business lending?

Answer: There are some healthy businesses in town, but I don't see them expanding until they are comfortable that we are over the worst. They are just not willing to stick their necks out yet.

Question: What has been the major lesson of this recession?

Answer: We have to be careful in balancing the need to grow the bank versus too much concentration in one area. We might have to look at slower growth .

KIRK CLAUSEN

NEVADA REGIONAL PRESIDENT, WELLS FARGO BANK

Question: At what point is Las Vegas in the economic cycle?

Answer: What I am reading and seeing anecdotally from customers is that the economy has stabilized and started to show some improvement. The only negative, and it is a big one, is unemployment.

Question: When will we see a sustained rebound in business lending?

Answer: Would I like to see lending more in line with deposit growth? Absolutely. I think a lot of businesses are not feeling especially strong about the economy and will sit on the sidelines for a little bit.

Question: What has been the major lesson of this recession?

Answer: We maintained our standards when others loosened theirs. In the short run, it was tough, but we made the decision that was best for customers and we are strong today.

REED RADOSEVICH

NEVADA PRESIDENT, NORTHERN TRUST BANK

Question: At what point is Las Vegas in the economic cycle?

Answer: My sense is that we are slowly recovering. But it's going to be a few years before we see a sustained recovery. We've hit bottom in the residential market but commercial is not fully played out. We are in for at least another year of pain before we hit bottom in commercial. In order for the local economy to prosper, we need to see the national economy heal first.

Question: When will we see a sustained rebound in business lending?

Answer: I think there are four factors at work. Underwriting has probably tightened a bit at the instruction of regulators. The pool of creditworthy businesses has shrunk. Businesses have scaled back on their lending requests. Some banks have had to boost their reserve capital to deal with future problem loans.

Question: What has been the major lesson of this recession?

Answer: Banks need to adhere to sound underwriting standards in good times and bad.

WILLIAM MARTIN

VICE CHAIRMAN AND CEO, SERVICE 1ST BANK

Question: At what point is Las Vegas in the economic cycle?

Answer: If we believe the (cycle) is "U" shaped, sadly we're still on the downside of the U and we can just pray we are approaching the curve back up. There's little sprouts of good news we can grab at, but this job thing is just hanging over everything.

Question: When will we see a sustained rebound in business lending?

Answer: I have $65 million in cash that I would love to lend out. By and large, real estate isn't much of an option. Because a lot of businesses are struggling financially, not enough of them qualify for loans. If I made loans to businesses that were losing money or breaking even, the bank examiners would say, "Are you crazy?"

Question: What has been the major lesson of this recession?

Answer: This is a very major event for a lot of people, maybe up to their early 40s, who have never really seen bad times. The economy itself is teaching a big lesson and wagging a big finger at people about not overdoing it.

ARVIND MENON

PRESIDENT AND CEO, MEADOWS BANK

Question: At what point is Las Vegas in the economic cycle?

Answer: I think we are probably near the bottom but not quite at the bottom. I think the worst is behind us, but how the local economy performs depends on how the national economy performs. It will be a gradual climb. I don't think we will see anything major until 2012.

Question: When will we see a sustained rebound in business lending?

Answer: Some people are making a big deal about banks not lending, but they are missing the boat. Businesses are not looking to expand and there is not a lot of demand for credit.

Question: What has been the major lesson of this recession?

Answer: Certainly, when housing prices head up in to the stratosphere, it is likely not going to last long. I don't think we will ever see that happen again.

DALLAS HAUN

PRESIDENT, CEO, CHAIRMAN, NEVADA STATE BANK

Question: At what point is Las Vegas in the economic cycle?

Answer: The whole Las Vegas economy is in the reset mode: resetting prices, resetting values, resetting debt loads, resetting expectations. But I do see light at the end of the tunnel. I want to be optimistic and say we will be seeing a sustained rebound about this time next year, the second or third quarter. Clearly, we need to see job creation in the national economy. Until that happens, it will be a very slow, creeping along, one-step-at-a-time recovery.

Question: When will we see a sustained rebound in business lending?

Answer: Probably the same time frame, maybe a quarter or two earlier. We're definitely spending more time, more effort and more money to get new clients.

Question: What has been the major lesson of this recession?

Answer: Debt, if abused, can be very harmful. I don't think we will see a repeat of that.

BRUCE HENDRICKS

CEO, BANK OF NEVADA

Question: At what point is Las Vegas in the economic cycle?

Answer: We're probably at, or near, the bottom in certain areas, residential real estate being one of them. I think we have a ways to go with commercial real estate. It's going to take a while to turn around some key indicators such as gaming revenues, air traffic and sales tax revenues. I think we will see a turnaround in the third quarter next year. I know some people pick '12 or '13, but I'm an optimist.

Question: When will we see a sustained rebound in business lending?

Answer: When we see more businesses that qualify for loans. We've seen some improvement in our small and midsized business lending. But really, until the economy improves overall, its is hard to see demand improving because of so many challenges to qualify.

Question: What has been the major lesson of this recession?

Answer: It would really help if we move aggressively to diversify the Southern Nevada economy. And, if it looks too good to be true, it probably is.

LORI SOREN

MARKET PRESIDENT, US BANK

Question: At what point is Las Vegas in the economic cycle?

Answer: From our perspective., the economy is slowly inching upward. We believe we need to see visitor volumes go up to create jobs on the Strip and have a trickle down effect on the community. But we have seen spending habits change and we are probably about 18 months from where we will see stability in market.

Question: When will we see a sustained rebound in business lending?

Answer: I would disagree that banks have turned off the tap. Banks are looking for quality clients and quality partners. We are open for business and have capital to lend.

Question: What has been the major lesson of this recession?

Answer: You can't overcommunicate with your clients. You need relationships and you need to nurture them. When you've had the number of bank failures in this cycle, it's the big difference why people won't forget the lessons.