Deposits at northern Nevada banks have rebounded from the lows they reached during the darkest days of the recession, but financial institutions need to get that money to work through lending.
Banks reported to the FDIC at mid-year that deposits in Reno and Sparks branches totaled $7.95 billion, a figure that's more than 16 percent higher than the $6.8 billion in deposits reported in 2008 and 2009. (Those figures don't include the giant Charles Schwab Bank which, while headquartered in Reno, serves a national market.)
Demand for loans, however, remains mixed.
Stan Wilmoth, president of Heritage Bank of Nevada and chairman elect of the Nevada Bankers Association, says commercial lenders at his bank see a market that is slowly stirring to life.
"It's starting to come back," he says. "We're hearing people talking about projects again."
Loans guaranteed by the Small Business Administration have been a bright spot for Heritage. The bank was the leading producer of SBA loans in the region during the federal fiscal year that ended Oct. 1, loaning nearly $6.3 million through 23 SBA loans.
But Chad Osorno, who heads business banking for Wells Fargo in the region, says demand from borrowers remains spotty at his bank, by the far the largest in the region.
"It's hit or miss depending on the industry," he says. "Some are willing to begin investing in plans and equipment. Others still are sitting on the sidelines."
Some potential borrowers, Wilmoth says, are discovering that national lenders who once flocked to Nevada are reluctant to make any loans no matter how solid in the state today because of their perception of economic weakness.
That, he says, is opening some opportunity for institutions headquartered in Nevada.
"You didn't need a good banker in good times," Wilmoth tells potential customers. "You need a good banker now."
Improvement in the employment outlook, meanwhile, will be the primary factor that drives consumer borrowing, says Dennis Flannigan, chief executive officer of Great Basin Federal Credit Union in Reno.
"The continuing issue for us will be the relative consumer confidence and their willingness to invest in cars," Flannigan says. "It's difficult to improve consumer confidence without improvement in employment."
On the other hand, he notes that the finances of consumers in the region have stabilized, the credit union's loan losses have declined, and Great Basin Financial Credit Union has been consistently profitable for much of the past year and a half.
