Falling rates hurt profits of small LV-area banks

Chris Jones

Thursday, Jan. 31, 2002 | 11:04 a.m.

Several Nevada-based community banks reported mixed earnings this week.

Henderson's Valley Bank reported a fourth quarter profit of $134,049, nearly three times the $52,791 it made during the same period of 2000.

Valley Bank's top executive was pleased with that performance, although he said its profits would have been larger without the Federal Reserve's 11 reductions in short-term interest rates last year.

"(The Fed's cuts made) it very difficult for banks across the country to manage their interest rate risk," said Barry Hulin, president and CEO. "We had a good year and met our budget, but it could have been a lot better had we not had so many rate cuts."

Lower interest rates hurt small banks that were unable to reprice their deposit liabilities as quickly as rates fell on their loan assets. Big banks such as Wells Fargo, however, generally performed well in the fourth quarter. They are less dependent on simple local loan income and earn fees from national products like credit cards and mortgages.

Hulin said Valley Bank's performance was aided by growth at its Pahrump branch, which opened in March. The company has also applied with regulators to open a third bank site at 3500 W. Sahara Ave.

Business Bank of Nevada's profits also improved. The Las Vegas-based bank earned $306,359 in the fourth quarter, up nearly 115 percent from the $142,586 it made in the fourth quarter of 2000.

"Our numbers are clearly going in the right direction," said John Guedry, president and CEO of Business Bank. "We're cautiously optimistic about 2002 (and) believe we can continue to grow the bank by approximately 10 to 15 percent year-over-year."

An accounting adjustment increased the unaudited fourth quarter profits at Sun West Bank to $952,000, although its actual income during the period was closer to $627,000, said Jackie DeLaney, president and CEO.

"(Adjustments) sort of skewed our numbers from last year's second and fourth quarters, but we're happy with our overall improvement," said DeLaney, whose bank earned $222,000 in the fourth quarter of 2000.

Nevada Commerce Bank also made progress last year, but it wasn't enough for the nearly 2-year-old bank to achieve profitability, said Colleen Misfeldt, executive vice president and chief financial officer. The bank reported a fourth quarter loss of $86,000 compared to a loss of about $127,000 during the same period of 2000.

Desert Community Bank ended its second full year of operation with a fourth quarter loss of approximately $33,000, said its president, James Howard. It lost $41,000 in the fourth quarter of 2000.

Bank of Commerce lost $35,318 in the fourth quarter, down significantly from the $104,000 profit the bank reported in the same period one year prior, said Robin Panek, executive vice president and CFO.

Earnings were off from their 2000 level at Community Bank of Nevada, where fourth quarter net income fell from $895,000 in 2000 to about $675,000 last year, said Ken Craig, vice president.