Banking on Las Vegas

Kevin Rademacher

Wednesday, Nov. 9, 2005 | 7:24 a.m.

In 1993 Boyd Gaming Corp. Chief Executive Bill Boyd and President Don Snyder met at the Las Vegas Country Club.

The topic of conversation, Snyder soon discovered, had nothing to do with slot machines or tourism trends.

"He wanted to start a bank that would be a significant, Nevada-based bank," recalled Snyder, who had a 22-year banking career prior to entering the tourism and gaming industries.

The resulting institution was BankWest of Nevada. Founded with $8 million in startup capital invested by a local board of directors, the institution had a modest $34 million in assets by the end of 1994.

Ten years later, BankWest had $2.2 billion in assets. Ranked by deposit statistics compiled by the Federal Deposit Insurance Corp., BankWest's $1.5 billion in deposits as of June 30 made it the fifth-largest bank in Clark County.

Asked if he ever expected that country club conversation to spark such a significant endeavor, Snyder paused.

"I got chills when you said that," he responded. "We've gone way beyond any of the expectations any of us would have had."

BankWest Chairman Art Marshall said the company has grown with relatively few pitfalls along the way -- the only real issue is raising enough money to keep up with growth.

"It's been an amazing thing from day one," he said.

While directors would be expected to speak positively of their own company, BankWest also draws compliments from a more unlikely source -- its competition.

"Those guys over there have done a great job," said Ken Ladd, president of U.S. Bank's Nevada operations.

He said his bank frequently competes with BankWest and praised it for its evenhanded approach.

"If I've got to compete, I would much rather compete with a good, solid, ethical competitor," Ladd said.

The bank, however, needed some added punch to continue its growth. Enter Robert Sarver, a 43-year-old banking and real estate whiz who started his first bank at the age of 23. That bank, which became National Bank of Arizona, was sold to Utah-based Zions Bancorporation in 1994.

Sarver joined BankWest's holding company -- now known as Western Alliance Bancorporation -- in 2002. He serves as chief executive and is the second-largest shareholder behind Boyd, and he joined with growth on his mind.

In short order, Western Alliance has established banking companies in Arizona and San Diego, and this year the parent company conducted a public stock offering.

"To do what we needed to do and what we wanted to do, we had to reach beyond ourselves," Snyder said of the offering.

Until he took a leadership role in Western Alliance, Sarver admits that he had steered clear of business dealings in Las Vegas.

"I had come out there with my real estate company and looked at property over the last six or seven or eight years, but I was probably not unlike a bunch of investors from out of state saying 'I think things are going to slow down. I think things are going to slow down.' " Sarver said. "And every year I was proven wrong."

While the bank's executives cite strong leadership and planning in BankWest's growth, Snyder said good timing didn't hurt either.

"It was a lot of different things that made it the perfect storm for starting a bank," he said.

In the early 1990s, a rash of mergers in the banking industry left some customers with a bad taste for larger banks. Those mergers also left displaced banking veterans free to pursue their own ventures.

"Big banks are often the best allies to smaller banks," said Joey Warmenhoven, Wedbush Morgan Securities Inc. senior vice president for investments.

While BankWest's rise to prominence is notable, it merely leads a list of successful Southern Nevada-based independent banks. Amid the rapid population and economic growth in Las Vegas, local banks have posted a seemingly endless string of positive earnings results.

Two other independent banks recently turned to Wall Street for a public stock offering.

Stock in Las Vegas-based Community Bank of Nevada opened trading on Dec. 16 at $30 a share. It was trading at more than $33 a share early this month. Less than six months after trading began, Community Bank purchased Henderson-based Bank of Commerce for about $40 million.

Community Bank went public just months after Valley Bancorp tested the stock market water. Las Vegas-based Valley opened trading on Sept. 23 at $23.50, and was trading at more than $31 early this month, and shares have traded as high as $45.

Sarver said the stock market interest in Las Vegas-area banks makes sense.

"There are not a lot of public companies other than gaming that are based in Nevada," he said. "So, if you are an investor and want to have a piece of the growth taking place in Nevada, there are not a lot of options. That played to our benefit."

After years of headlines touting nation-leading growth rates, the interest in Las Vegas as a hot spot for founding banks comes as little surprise to those in the financial community, Warmenhoven said.

"It's a market a lot of people want to be in," he said. "When you buy into a community bank, it's really like buying a mutual fund of the local economy."

The only downside to a Las Vegas-area company's public venture is perception, Sarver added.

"The negative to a certain degree is a lot of people aren't as familiar or up to date with what's going on in Las Vegas in some of the diversification in the economy things like the furniture mart and other businesses here," he said.

He recalled discussions with financial market players leading up to the stock offering. "They tend to view it maybe as it was 20 years ago. Part of the challenge is educating people out there really about what Las Vegas is today."

Jim Rogers is Nevada's university system chancellor, owner of Sunbelt Communications Co. and a board member of Las Vegas-based Nevada First Bank. He said growth is a key to success.

"It really is the growth," he said. "A lot of potential mistakes are fixed in an economy that grows and grows."

Southern Nevada is blessed with high-quality banking talent, he said. In a market producing strong results, seemingly small banks are able to pay well enough to attract strong bankers who bring an established book of business, even bankers who were originally brought to town by large national and regional competitors.

"A good market gives you some flexibility," Rogers said.

It also can make bankers look like geniuses. Tod Little, president of Henderson-based Silver State Bank, said such a strong economy has made the banking equation more simple than it would be.

"Banks are directly tied to the community they are operating in," he said. "If the economy was to go south, you would see some bank earnings go south immediately."

Since the local economy has enjoyed such a prolonged run of good fortune, Little said, the challenge is to watch out for potential potholes.

"You keep watching for signs and looking to make sure you're not lending into some kind of bubble," he said. "We listen to what the economists are saying. We listen to what the (Federal Reserve) is saying and what the real estate gurus are saying ...

"When the economy is as good as it is, it's not that difficult to make money as a banker."

Kevin Rademacher can be reached at 259-4069 or at kevinr@lasvegassun.com.

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