LV bankers dispute Nevada economic report

Las Vegas bankers say there is plenty of capital available in Nevada, despite a report card issued by the Washington, D.C.-based Corporation for Enterprise Development suggesting Nevada banks are sluggish in lending to businesses.

The corporation issued a report card this month grading each state in the country on three economic development factors: Economic performance, business vitality and development capacity.

As with most economic reports in recent years, Nevada scored high on categories based on job growth and business climate.

But it was in the area of development capacity where Nevada fell short, receiving a D -- down from last year's C. That category focused in part on lending institutions.

The report said Nevada ranked near the bottom of the country in the overall amount of commercial loans, "indicating either weak or inactive banks."

The grades on lending are derived from Federal Deposit Insurance Corp. data and are based on a ratio of commercial/industrial lending to deposits. Nevada banks ranked 47th in commercial and industrial loans.

"The measure is designed to indicate how aggressively banks are using their resources," said the CFED's Linda Keeney.

But area banks say they are making record loans in the local market. Bank of America spokesman Paul Stowell said that bank has placed emphasis on lending to the gaming industry and to small business.

"We've by far blown the doors off the bank in terms of what we've been lending," Stowell said.

He added federal law places a cap on what can be lent in proportion to deposits.

And Bank of America Area Executive George Smith said the state's two largest industries are more likely to get loans out of state.

"The largest credit takers in Nevada are going to be casinos and mining companies," Smith said. "I would guess the majority of those go to out-of-state banks."

Likewise, Jay Kornmayer, vice president of commercial lending for Wells Fargo Bank, said the report doesn't appear to account for interstate banking. He said more than 90 percent of deposits in Nevada are held by banks headquartered outside Nevada like Wells and B of A.

Kornmayer said some banks, like BancOne, make loans in Nevada without having offices here.

"Financial resources, I don't think, are a major concern in this state," Kornmayer said.

Paul Workman, a vice president at BankWest of Nevada, pointed to two reasons the study may indicate a lack of aggressive lending. One, Las Vegas has a larger-than-usual share of projects, especially casinos, partially financed by owners.

"We have large items that are owner-financed," Workman said.

Secondly, Southern Nevada commerce is oriented towards land development as opposed to loans for other forms of business. Banks do not want to devote too many loans to land development because of its historically risky nature.

And even with that, bankers say there is plenty of capital to be obtained.

"Show me a deal I can't get done," Workman said. "We can get them done. The nature of our commercial development is the reason (for the ranking), not lackadaisical bankers."

Even CFED personnel said the grade could simply mean businesses are seeking money out of state.

"It wouldn't be surprising if that money is coming from elsewhere," the CFED's Daphne Clones said.

And access to capital can be seen in other areas of the grade card, which concluded Nevada has the nation's best economy.

Grades for economic performance were based on employment, earnings and job quality. Nevada received an A in that area. The report cited the creation of new jobs and the state's status as the 17th highest ranking state in per-capita pay.

The state also scored well in the are of business vitality, getting a B.

"Despite having the nation's least structurally diverse economy, Nevada's business sector still rated as one of the nation's best," the report stated.

It cited Nevada as having the fourth lowest rate in the nation for business closures and said it enjoys the 11th best rate of new companies being formed.

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