State banks helped by government lend more

While big banks that got government assistance are making fewer loans, the two Nevada banks that received federal financial support did increase their lending in the last three months of 2008 by small percentages.

"Although these are very difficult times for the industry and for Nevada, in general under prudent underwriting conditions, we certainly want to participate in helping the state climb out of the recession," said Dale Gibbons, chief financial officer for Western Alliance Bancorporation.

Bank of Nevada, a subsidiary of Las Vegas-based Western Alliance, boosted its total loans during the fourth quarter by 1.3 percent, or $148 million to $2.3 billion.

Nevada State Bank, a subsidiary of Salt Lake City-based Zions Bancorporation, increased its lending by $20 million or 0.6 percent to $3.2 billion during the last three months of 2008.

"We are actively trying to let folks know that we are lending," Nevada State spokeswoman Sandi Milton said.

On the other hand, nationally the largest bank recipients of Troubled Assets Relief Program money in February reduced lending by 2.2 percent across commercial and consumer loan categories in February, compared with the prior month, according to The Associated Press.

The two local banks have not yet released financial results for the first quarter, but demand for loans has decreased this year at Bank of Nevada, Gibbons said.

"Into 2009, we have seen loan demand retreat," he said. "Obviously, economic activity has slowed significantly."

Some businesses are reluctant to take on new debt because of the economy, Gibbons said.

Nevada State booked 28 small-business loans for $3 million in the first quarter, Milton said.

As of January, the bank made 38 commercial loans for a total of $4 million and 79 consumer loans for $3.9 million, Milton said.

"We are lending. We have lowered our rates and accelerated our approval program for business loans," she said in an e-mail.

Although TARP was designed to help get banks lending again, the continued deterioration in commercial real estate and general business lending and the amount of credit being made available for student and auto loans has kept loan levels down nationally.

Particularly problematic: continued deterioration in commercial real estate and general business lending and the credit being made available for student and auto loans.

The lone bright spot nationally remained home loans. The Treasury said 16 of the 18 banks surveyed increased mortgage originations in February, resulting in a 35 percent increase in mortgage lending from January levels.

The February dip in lending adds to pressure on the Obama administration's efforts to restart fragile credit markets. The Treasury has committed $95 billion in TARP money for new programs to boost consumer and business lending, though they are either just starting or are still in the development phase.

The report suggests that jawboning by federal officials for banks to use TARP funds to boost lending is having a limited effect.

The two local banks with TARP money can point to limited loan growth late last year.

"Every one of our loan categories increased a little bit in the quarter," Gibbons said.

Those categories include residential mortgage loans, commercial and industrial loans, development loans and commercial real estate loans.

Western Alliance is making regular payments on its government TARP investments but has not set a timetable for paying back the government money, as some institutions have, Gibbons said.

The government invested $140 million with Western Alliance, and the holding company allocated $60 million of that amount to Bank of Nevada. Bank of Nevada used the federal investment money to increase lending, Gibbons said.

Zions received $1.4 billion in federal assistance through TARP late last year.

Several giant regional and money-center banks serving Nevada also received loans under the federal Troubled Assets Relief Program, but those banks don't break out financial numbers for Nevada from their total nationally.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420. The Associated Press contributed to this report.