War not expected to slow local investment, lending

Kevin Rademacher

Friday, March 21, 2003 | 11:09 a.m.

With the war in the Middle East still in its early stages, bankers and business people say the conflict should not slow commercial lending and investment in Las Vegas.

The start of the war, many lenders said Thursday, has removed some of the economic uncertainty that started with the Sept. 11 terrorist attacks.

"A lot of people have been waiting for something to happen," said Mark Phillips, executive vice president and chief credit officer for Business Bank of Nevada. "It will never be normal after 9-11, but people have a little more certainty about it now."

Since the first bombs were dropped Wednesday night, borrowers have not backed away.

"I would be shocked if anybody cancelled plans over this," said Bill Martin, president and CEO of Nevada State Bank.

"They have known this was coming for two months. Any decision to postpone a loan was probably made long ago, and it was probably based on a lot of economic issues, not just this one," he said.

If anyone did postpone loans, even months ago, the numbers were small. Kirk V. Clausen, president and chief executive officer of Wells Fargo Bank of Nevada, said the bank's year-over-year loan totals are running ahead of last year.

"I like to think that people are planning for what business will look like in six or eight months," Clausen said. "(Interest) rates are pretty darn good and low. There's a lot of good reason to borrow right now."

Martin agreed.

"I don't see this having any impact on the lending market," he said. "Everybody has speculated and speculated about this. Now, it's really afterwards that people are looking at."

Lenders have no plans to reduce lending with more rigid lending criteria. Clausen said the only changes Wells Fargo made to its loan standards were clauses to ease payment requirements for service members who have been transferred overseas.

"Our credit policies are designed and built for the long haul," he said.

Phillips maintained his optimism, but hedged his bets.

"If it impacts tourism, it's going to impact lending here," he said.

At least one local borrower had a similar perspective.

"A short-term conflict is not going to create an issue," said Terry Richert, chief financial officer for Rock Solutions, a Las Vegas construction company specializing in trenching projects.

In addition to contracting, the company leases equipment to other companies. It took out a loan early this year to purchase additional equipment.

Rock Solutions is not looking back on the move and future plans are unchanged, but should the war drag on, that could change.

"If this goes on long-term, it might be a problem," Richert said.

Much of the Rock Solutions' work is done in conjunction with large-scale developments, and funding is well established.

The biggest danger for the company would be a slowdown in residential growth and the diversification of the business community that could cause future projects to dry up.

History, however, is on Southern Nevada's side.

"We have to be realistic and say that the tourism industry is the main driving force here," Richert said. "If you look at 9-11, construction wasn't affected (permanently). We've been blessed to be insulated from some of those national trends."