By Craig A. Ruark
Saying that all banks are the same is like saying all dogs have tails—there may be a wagging appendage but the length, shape, and how the dog carries and uses its tail greatly vary. So, while all banks deal with money, the size of the institution, the way they handle the money, criteria for loans, and their target customers also differs from one end of the scale to the other.
Ten years ago, when the recession hit, it was thought that some banks were too big to let fail. Banks such as Citigroup, Bank of America, JP Morgan Chase, Goldman Sachs, and Morgan Stanley on a national level and regional institutions such as Zions Bancorp (Nevada State Bank), Western Alliance Bancorporation (Bank of Nevada), and Bank of George received bailout money. All totaled, 979 financial institutions received a total disbursement of $627 billion. To date, the government has been reimbursed$390 billion in principal and $323 billion in revenues from dividends, interest, and other fees. There is still another $86.1 billion in outstanding principal to be collected.
Despite the bailouts, the Federal Deposit Insurance Corporation (FDIC) closed 465 failed banks between 2008 and 2012. The accounts from those failed banks were either taken over by larger banks, or the customers received money for their deposits from the FDIC.
Because of the banking crisis, regulations were put in place under the Dodd-Frank Wall Street Reform and Consumer Protection Act, to improve accountability and transparency in the financial system, to end “too big to fail,”to protect the American taxpayer by ending bailouts, and to protect consumers from abusive financial services practices.
Perhaps, one of the best outcomes of the recession is the improved stability of ‘community’ banks that focus on serving the local businesses. Before the recession, there were 18 community business banks in Nevada and today; there are four at each end of the state. Along with the economy, these banks are growing in strength.
“However, the Dodd-Frank language was written as a one size fits all bill, not written with community banks in mind, so there were a lot of things being applied to smaller banks that didn’t make a lot of sense,” said Ryan Sullivan, president and CEO for the Bank of George, one of the community banks in Las Vegas.
To remove and adjust some of the over-reaching and unduly burdensome regulations of Dodd-Frank, the 2017-2018 Economic Growth, Regulatory Relief and Consumer Protection Act was established.“This act remedies many of the issues with Dodd-Frank, helps to promote economic growth, provide tailored regulatory relief, and enhance consumer protections, and lets community banks do what they do best, which is to help small businesses,” said Sullivan.
Bank of George is a locally owned bank that opened its doors just before the recession on September 24, 2007. Today, the bank has $220 million in assets, $197 million in deposits, and two branches in the Las Vegas Valley. While it is federally authorized to make loans up to $8 million, the board of directors have made an internal decision to cap their loans at $6.5 million. Bank of George is also listed as one of the Top 100 SBA 7A lenders in the country and has found a niche in helping small businesses, making loans as low as $50 to $100,000.
“We don’t try to take care of casinos,” said Paul Workman, senior vice president of asset development for Bank of George. “We take care of the small to medium size businesses and have a large percentage of professionals, doctors, CPAs, and small business owners as banking clients.”
Workman, with nearly 35 years in the Las Vegas banking business, spends a lot of his time helping startup and young businesses develop a plan for their business future and making key connections that help them along the way.
Another community bank with a 20-year history in the state is Bank of Nevada in southern Nevada and sister bank, First Independent Bank in northern Nevada. A division of Western Alliance Bank, their corporation has $20 billion in assets (which is still small compared to the trillions held by the larger bank corporations), is one of the larger community banks in the state with a total of sixteen branches between them.
“The entire industry has transitioned from what it was 15 years ago, and electronic services play more of an important role in how customers use a bank. When it comes to actual business operations, it is more common for businesses to bank remotely,” said Joyce Smith is the senior vice president and regional manager of Bank of Nevada. “Even with fewer branches—because of technology we are able to offer all of the same consumer services as the larger, nationwide banks.”
According to Smith, because of the local management, their bank is more agile and can move quickly when it comes to loan decision making. Another advantage is the fact that while all banks are subject to strict government regulations, smaller banks are more in touch with their client’s businesses and industries and because of the personal relationships, might find better ways to structure loans than larger banks would consider. “We would not make any loans that would jeopardize our integrity, but we do have a better understanding of our clients and their businesses,” said Smith.
Town & Country Bank with four locations in the Las Vegas Valley is a locally owned community bank with $160 million in assets. Resources within the bank allow them to loan up to $5 million but they also collaborate with sister banks in other areas outside of Nevada to increase their lending power up to $15 million. “All of the community banks are pretty much alike in that each of us tries to serve our clients, we are a high touch bank and get to know our customers very well, we are accessible, and truly a community-oriented bank in a large town,” said Darrel Small, president,and CEO. “I think what makes us stand out is we have a mid-west philosophy when it comes to lending and how we treat customers.”
More than 90 percent of today’s commerce transactions are electronic, so the limited availability of bank branches is compensated by the ability of customers to bank remotely. Community banks will process credit cards, provide equipment that will quickly scan a large number of checks and make the deposits directly to the business account. If a business, such as a restaurant, deals with a lot of cash, the banks use armored transport service partners to schedule regular cash pickups for deposit. The goal is to handle the customers banking as much as possible without them having to set foot in the bank.
While community banks are generally chartered to service the needs of small to medium size businesses, they also provide a full complement of personal banking services for their business customers. They have competitive checking and savings account programs, accept mobile deposits and are members of one or more of the ATM networks such as the Plus System®, Star System®, and Interlink®so that customers can use thousands of ATMs in the U.S. and around the world.
Other community banks in Nevada include the Meadows Bank with branches both north and south, Heritage Bank of Nevada in Reno, and the new Valley Bank of Nevada in Las Vegas.