New bank president’s challenge: Growing while staying small

Phil Levine

Wednesday, March 29, 2000 | 11 a.m.

President Calvin Coolidge once declared that "the business of America is business."

John Guedry, recently appointed president and chief executive officer of Business Bank of Nevada, would likely add the word "small" to that adage.

Last month, Guedry assumed his new position as the bank's CEO, replacing predecessor Al Alvarez.

Concurrent to Guedry's arrival, his former Valley Bank colleague -- and Bank of America senior vice president -- Larry Charlton assumed the dual role of Business Bank's chief financial officer and chief operating officer.

Business Bank has three local offices, as well as one in Carson City. The bank's Las Vegas headquarters is at 6085 W. Twain Ave.

Guedry expects to open more branches in both Northern and Southern Nevada over the next two years.

"We don't want to grow the franchise just for the sake of growth," he said. "Our No. 1 objective is to grow the bank the right way, not at the expense of added risk."

Guedry declined to comment on the reasons behind the departure of his predecessor Alvarez, referring questions to Business Bank Chairman Jason Awad.

Both Awad and Alvarez could not be reached for comment.

Founded in 1995, Business Bank currently has about $143 million in assets.

Guedry said he'd like to see that number reach the $250 million mark within two years.

The bank reported 1999 after-tax earnings of $779,842, compared to a loss of $752,607 a year earlier.

In recent years, several new community banks have set their sights on serving the financial needs of Southern Nevada's small business community.

Recent additions to the local community bank sector include Nevada Commerce Bank and Desert Community Bank, as well as Guedry's former employer, Community Bank of Nevada.

Other growing community bank franchises include Sun West Bank, Silver State Bank and BankWest of Nevada.

Does the proliferation of community banks mean that local small businesses are no longer underserved by the financial community?

"I would say that there is a finite number of customers out there," said Guedry.

"We are already seeing more competition (among community banks) in pricing, including a jump in CD interest rates.

"I think you have to keep a close eye on the deposit numbers. They will indicate if we're getting near a saturation point (of community banks.)"

As a former senior Bank of America executive, Charlton understands the contrasting demands of working for the nation's largest financial institution versus a growing community bank.

"I understand why the big banks use the economies of scale to pare costs," said Charlton. "As a business decision, I can see why that would make sense.

"But, you just can't be all things to all segments of the market."

After more than a quarter century in Nevada's banking sector, Charlton realized in his last position with B of A that he had drifted far from what first attracted him to banking.

"I was spending a lot of time on airplanes," he said.

"I wanted to get back to the basics of banking. At a bank this size, it's possible to know all the people I work with."

A temporary obstacle on Business Bank's path to financial success was last year's incident involving $2.2 million in allegedly diverted ATM funds.

Suits and countersuits ensued, but that matter was settled out of court last spring when the bank worked out a structured repayment agreement with ATM processor NMS Financial Inc.

"The parties have reached an agreement for restitution, and more than half of the amount involved has already been repaid," said Guedry.

"That event was previously charged off, and is behind us."

Now fully ensconced in his new position, Guedry's eyes are fixed firmly to the future.

"We haven't made specific site selections as yet, but there are a number of areas where it would make sense for us to look for growth," he said.

"In Northern Nevada, Reno would be a logical market (for expansion). Our Carson City branch has generated over $16 million in core deposits in just over three months.

"While in Southern Nevada, in keeping with our client base, I think we would concentrate (growing) in areas where there's a proliferation of manufacturing, warehousing and distribution facilities."

Like most members of Nevada's banking community, Guedry and Charlton are closely monitoring events surrounding the proposed merger of First Security Corp. and Nevada State Bank parent Zions Bancorporation.

Questions linger as to the merger's likelihood; First Security shareholders have approved the deal, and Zions' shareholders will vote Friday to determine the fate of the proposed union.

"I think that either way it may present us with an opportunity to hire some very talented people," said Guedry.

Adds Charlton: "Having the right people is really the key. Product and location are important, but if we recruit the highest level of people, we will be able to fill the niche left to us by the big bank mergers."