Three major banks in Nevada on Monday acknowledged that they paid or may pay bonuses to senior executives although the banks relied on taxpayers money to bolster their financial strength.
Bruce Hendricks, chief executive officer of Bank of Nevada, received a $19,875 bonus on top of his $265,000 salary. Yet, Bank of Nevada lost $124 million last year.
Hendricks’ bank is a subsidiary of Las Vegas-based Western Alliance Bancorporation, which sold $140 million in preferred stock to the government under the Troubled Asset Relief Program.
Dallas Haun, chief executive officer of Nevada State Bank, declined to say what he and other senior executives at Nevada State may receive in bonuses, saying it would violate his and their privacy.
Nevada State is a subsidiary Salt Lake City-based Zions Corp., a holding company that was approved for $1.4 billion in TARP money.
Nevada State executives may receive lower bonuses than in prior years “except for those that have contractual agreements,” Haun said. Nevada State lost $46 million last year.
Haun noted that the holding company has yet to approve any bonuses for Nevada State executives.
City National Corp., a national bank that operates in Nevada, received $400 million in TARP funds, spokesman Paul Stowell said.
John Guedry, executive vice president and Nevada regional manager for City National, will receive a bonus for 2008, Stowell said.
“He’s getting much less or significantly lower than in previous years,” Stowell said, but added that he didn’t know how much Guedry will get.
Guedry does not hold one of the key positions for which City National must disclose compensation in reports to the Securities and Exchange Commission, Stowell said. The top four executives at City National are not getting a bonus, he said.
City National reported that consolidated profits last year dropped to $103 million last year from $223 million in the prior year. The bank doesn’t file separate numbers for Nevada operations.
Stowell said TARP funds are not a bailout, because banks getting TARP money must pay 5 percent on the preferred stock sold to the government.
Some critics argue that banks getting TARP money should not pay bonuses to executives for 2008.
Andy Matthews, spokesman for free-market think tank Nevada Policy Research Institute, said the issue underscores the problem of using government money to bolster private businesses.
Either the government starts telling private businesses what they can do, or “the public is rightfully going to be upset,” Matthews said.
The government ought to allow businesses to fail so that resources can be used for successful ventures, he said.
Giving taxpayer money to private businesses “basically takes away from the overall efficiency of the free-market system,” he said.
Western Alliance bases cash bonuses on a formula based on earnings per share, net income, earnings growth, deposit growth and quality control, which includes audit performance and regulatory compliance.
While the holding company didn’t make a profit, Hendricks got high marks for loan growth and quality control, said Dale Gibbons, chief financial officer of Western Alliance.
Neither Gibbons nor Robert Sarver, chief executive officer and chairman of holding company Western Alliance Bancorporation, received a bonus or raise, Gibbons said.
Sarver continued to receive $575,000 in salary but received no bonus. That still exceeds the $500,000 that President Barack Obama early the month said will be the cap for top executives at companies receiving “extraordinary help from U.S. taxpayers.”
Contact reporter John G. Edwards at firstname.lastname@example.org or 702-383-0420.