The Bank Holdings shrinks lending, posts quarterly loss

The Bank Holdings, the Reno-based parent of Nevada Security Bank, continued to rein in its lending during the third quarter.

The company said it had $385.6 million in loans on its books on Sept. 30, down 12 percent from the $440.4 million in loans it held at the start of the year.

That's a key metric for the company as it struggles to return to profitability in a troubled lending market.

In a filing with the Securities and Exchange Commission last week, The Bank Holdings reported a loss of $8.8 million during the third quarter. That compares with a loss of $40.1 million a year earlier.

Last year's loss ballooned, however, with nearly $27 million in write-downs of the value of The Bank Holdings' acquisition in 2006 of Reno's Northern Nevada Bank and two smaller real estate exchange companies.

The company set aside an additional $7.3 million during this year's third quarter to cover potential bad loans. Some $45.5 million in loans on the bank's books were categorized as non-performing at the end of the third quarter. (Generally, that means that a loan is at least 90 days overdue.)

The Bank Holdings now owns real estate valued at about $18.4 million that it's taken back after borrowers stopped paying on their loans.

The 22 properties owned by the bank range from a retail and office building in Tahoe City valued at $3.7 million to residential lots and small industrial and retail properties scattered throughout northern Nevada and the Sacramento region.

Hal Giomi, chief executive officer of The Bank Holdings, said the market for most of the properties now amounts to 30 to 45 cents on the dollar.

Lending for real estate construction is shrinking fast at the bank, declining by some $41 million since the start of the year.

The bank's non-performing loans also include nearly $15 million in commercial and industrial financing, such as operating loans. Jack Buchold, the company's chief financial officer, said that segment of lending has struggled increasingly as the recession keeps its grip on northern Nevada businesses.

The bank has reduced its commercial and financial lending by 21 percent during the past 12 months.

While the bank struggles with repayment of loans, Buchold noted that its basic business continued to show some signs of improvement in recent months.

The spread between the amount it paid to depositors and the amount it collected from borrowers amounted to $2.4 million during the third quarter.

Deposits totaled $484.9 million on Sept. 30, a 4 percent increase since the start of the year. During the same time, the bank said it reduced its reliance on certificates of deposits generated by third-party brokers by $109 million.

The company said it employed the equivalent of 79 fulltime workers on Sept. 30, a decline of 23 in the past year.