Nevada Commerce Bank fails

Regulators seized Nevada Commerce Bank this afternoon, making it the 10th Nevada bank to fail since 2008.

City National Bank will assume Nevada Commerce Bank's deposits. Deposits are insured up to $250,000 by the Federal Deposit Insurance Corp.

Nevada Commerce, which opened in 2000, has been fighting a losing battle as the recession continued relentlessly and loan losses mounted.

The bank had 40 percent of its loans in construction and land, plus another 35 percent in commercial real estate loans at the end of 2008 when the recession tightened its chokehold on Southern Nevada and sent real estate values into free fall.

The bank reported $145 million in assets. But it reported a $5.4 million loss in 2010, its third consecutive year of red ink.

The bank tried to reinvent itself by hiring a team of Small Business Administration loan specialists from Silver State Bank after regulators closed that bank in 2008.

Former Silver State Bank President Calvin Regan was named executive vice president at Nevada Commerce and led the SBA team.

About a year later, however, Regan resigned from Nevada Commerce and joined Meadows Bank, one of the area's newest and financially strongest community institutions.

Regan brought eight SBA specialists with him to Meadows Bank, crippling the effort to make SBA loans at Nevada Commerce.

In late 2009, the Federal Deposit Insurance Corp. disclosed that Nevada Commerce signed a consent order, which directed officers and directors to restore the bank to a safe-and-sound condition and to reduce its concentration of commercial real estate loans.

The FDIC required the bank to boost its risk-based capital, one measure of net worth or equity, to 12 percent. The bank reported 9.6 percent risk-based capital at the time, but it dropped to 4.5 percent at the end of 2010, according to SNL Financial, an analytical firm.

In September last year, the FDIC followed up the original consent order with a directive that Nevada Commerce take "prompt corrective action." The federal regulatory agency said the bank's condition was continuing to deteriorate.

Chief Executive Kathy Phillips tried relentlessly to raise capital to keep the bank going, but repeated efforts to sign up would-be investors failed.

On at least one occasion, Phillips believed she had a commitment from an investor will to buy stock and boost Nevada Commerce capital, but the deal apparently fell through.

Bankers say it has become difficult to raise capital, because the continuing recession in Southern Nevada has created a steady flow of losses at all but a few local institutions.

At year-end 2010, Nevada Commerce's risk-based capital had slipped to 4.5 percent. More ominously, about 30 percent of its assets were nonperforming loans or foreclosed real estate.

The bank has deep roots in the Las Vegas business community.

Long-time banker James Bradham, former chairman of the Nevada Development Authority, helped found the bank in 2000 and was bank board chairman. Bradham served as CEO for Nevada Commerce Bank for a time.

Claudine Williams, owner and operator of the Holiday, the Strip casino that was sold to Harrah's, was chairwoman of Nevada Commerce Bank before she died in 2009. She also was chairman of American Bank of Commerce, a bank that Bradham ran before it was sold in 1997 to the holding company for First Security Bank.

A former American Bank officer said Bradham pursued a more conservative strategy at American Bank than later at Nevada Commerce. Nevada Commerce's gross loans to deposits totaled 80 percent at year end 2008, compared with only 51 perent at American Bank in late 1996 before the acquisition.

Jerry Dye, former owner of Dye Associates Developers, served as board secretary for Nevada Commerce. Other Nevada Commerce directors were Timothy Cashman, owner of Las Vegas Harley- Davidson Sales & Service; Astoria Homes founder Joel Laub; Jerilyn Clayton, former owner of Consolidated Mortgage; VTN Nevada President Gene Kraumetbauer; Mojave Electric CEO Dennis Nelson; John Sullivan, president of Territory Inc. and managing member of Full House Investments; and David Rocchio, president of Capriati Construction.

It had offices at 6975 Edmond St. and 3200 Valley View Blvd.

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