Sign of improving economy: Some local commercial banks post profit

Some Southern Nevada commercial banks started to dam the river of red ink and showed first-quarter profits, suggesting that the recession may be losing its grip on the local economy.

During the year's first three months, five of 13 banks posted profits, including giants Nevada State Bank and Bank of Nevada, data compiled by research firm SNL Financial show.

Although more than half lost money, that's an improvement over the fourth quarter of last year, when only three of 13 reported net income.

"It's encouraging that some of the banks have turned the corner and have gone from losses to profits, and hopefully others will be able to do the same as the economy improves," Nevada Bankers Association Chief Executive Officer William Uffelman said. "It will be a while before they completely recover.''

Dale Gibbons, chief financial officer of Western Alliance Bancorporation, the holding company for Bank of Nevada, said he was encouraged, too. He noted higher passenger numbers at McCarran International Airport, better average hotel room rates and other indicators of an improving economy.

The local banks can be divided roughly between the haves and have nots.

Among midsize institutions, Meadows Bank, Service1st Bank and Bank of George all turned profits.

On the other hand, Bank of Las Vegas, a subsidiary of Capitol Bancorp of Lansing, Mich., cut the bleeding to a trickle, losing $696,000 compared with an $18 million loss in the fourth quarter. However, the bank is short on capital. Its net worth or capital ratio, equity divided by total assets, is thin at 2.9 percent. Nonperforming assets, including foreclosed real estate and past-due loans, rose to 27.4 percent from 24.6 percent at the end of the fourth quarter.

1st Commerce Bank, the other Capitol Bancorp institution in Southern Nevada, is also looking pale. It's losses widened to $1.8 million in the first quarter from a $320,000 loss in the fourth quarter. 1st Commerce similarly is thinly capitalized at 3.6 percent and is struggling with 18.2 percent of assets nonperforming.

Town & Country Bank is doing better but still hurting as it posted a $1.6 million loss on top of a $3.2 million fourth-quarter loss. It has a 12.6 percent capital ratio, but 19.5 percent of its assets are nonperforming.

First Security Bank cut losses in half to $450,000 in the first quarter, down from $937,000 in last year's fourth quarter.

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