WHAT makes a community a community? From educators and law enforcement to medical professionals and retailers, every individual plays an important role to the success of the community. Banks play a key part in supporting the community as well.
By providing loans, checking and savings accounts and a range of products and services, banks help create stable, prosperous communities. As financial partners, banks support economic growth, health and vitality.
And, during times of economic hardship banks show loyalty to the communities where they’re located. It’s the day-to-day involvement where they shine, whether that’s by creating economic stability in their state, educating the children who will become business leaders or educating their own employees so they can rise to leadership positions.
“We have a lot of people coming to town,” said Stan Wilmoth, president/CEO, Heritage Bank of Nevada. He went on to add that those moving bring both businesses and jobs resulting in increased employment.
“[The bank] does a lot of 504s and 7(a)s,” he added, referring to the types of Small Business Administration (SBA) loans that are common for their clients. “But during the economic downturn, that’s where you really prove yourself. That was a time we proved our mettle, because you don’t need to be a great bank only during good times when anybody will make you a loan. You need to be a great bank when things aren’t going so good.”
Part of the Community
“Typically, what a bank does is pay a nice rate on savings [accounts] and take those moneys and lend them to businesses who need to borrow capital for anything from manufacture to purchasing raw materials or inventory, or a line of credit to finance receivables when buying things on trade,” said James York, president/CEO, Valley Bank of Nevada.
In Nevada, that’s often with a small business and banks work with local businesses, such as dairies, financing equipment to improve capacity in their bottling system, or financing business owners who want to own their own building because of cost savings and tax advantages.
Nevada banks can bring federal funds to local businesses. Dutch Bros, a drive-through coffee franchise, opened in Carson City in 2007. When owners Andy and Jill Head decided to open a second location in 2017, Nevada State Bank was able to fund it with a SBA 7(a) loan. Where big banks didn’t listen to what the owners said they needed for funding, the local bank did, securing a federally guaranteed SBA loan.
“Where I have my branches, my market areas are unique because the businesses we work with, that is our community,” said Spencer Hafen, president/CEO, Nevada Bank and Trust. The bank has branches in Mesquite, Caliente, Ely and Elko. “Financial institutions do a lot for a community. I’ve seen them close, like in Pioche. You could see the impact of a closed bank on a community. That’s how my bank started 40 years ago. There was no bank in Caliente and all the business owners had to drive to Pioche.” That 30 mile drive made a big difference 40 years ago.
Hafen added, “I’ve seen the devastation that comes when the bank of that little town closes and people don’t have access or it becomes more burdensome to get to a bank. We really try to do as much as we can to offer digital solutions for those people who live in rural areas. It’s critical for their needs.”
“Today, even a small bank like ours with two branches offers the same products and services as large national banks,” said York. “All the slick banking things you see on TV, you can do. We’ve got them all.”
Nevada Bank and Trust offers a robust online mobile platform, direct deposit, ACH (automated clearing house) electronic funds transfer, remote deposit – everything. “In rural areas, to get banking to people, we’ve invested in what I consider a nice robust mobile platform,” said Hafen.
The key to a smaller bank is that customers can come in, sit down with a banker and get answers to their banking questions.
“We can help from startup to selling the business,” said York. “We can help them find a CPA, find attorneys, structure expansion deals, partner deals or sellout deals, and we are experienced at the financing element of all of these. As a banker, you become Jack of all trades.”
Each customer might be from a different industry, but there are similarities in the financial transactions and the advice.
York added, “We make our own decisions, have the local decision authority, and we’re not sending it off to an ivory tower somewhere, so if it makes sense and we can do it? Then we do.”
Heritage Bank works with SCORE, volunteer business mentors, who guide new business owners from startup. “Sometimes we can help the new business owner launch their business and sometimes we can’t,” said Wilmoth. “But SCORE volunteers can give them a roadmap to take them from not being able to get financing to being able to finance a business.”
Nevada banks have a stake in working toward a stable economy. The 2008 financial downturn was one of the driving forces behind the Governor’s Office of Economic Development (GOED) working with the Brookings Institute to find ways to diversify the economy into sustainable industries. Gaming alone couldn’t sustain the economy, even though it remains a driving economic force.
“We [are] supporting the economy. We’re investing in infrastructure like affordable housing,” said John Guedry, CEO, Bank of Nevada. Bank of Nevada was the funding bank for The Smith Center in Southern Nevada even during the depths of the recession.
“Banks are obviously a very important part of the economy and absolutely help the local economy grow by providing products and services that businesses can use,” said Arvind Menon, president/CEO, Meadows Bank. “From a conventional standpoint we do support a lot of businesses both in Reno and in Southern Nevada, either they’re moving into town or they’re starting a new business. Sometimes it’s a person who has already been in that line of business and then we’ll be a lot more comfortable making those kinds of loans. He or she may have been working for someone and decide they want to go out on their own. We support those kinds of businesses as well.”
“When you look at businesses that fail, oftentimes it’s for lack of capital,” said Craig Kirkland, EVP/director of retail banking, Nevada State Bank. “You want to be responsible as a lender, you want to help businesses understand what their true needs are. You don’t want to lend them too much money that will get them in trouble if there’s an unforeseen change or a downturn.”
So it’s important for banks to act as collaborative value-added partners, understanding business needs, anticipating future needs and supplying solutions to meet them.
For startups, it may not be easy to get funding, and Meadows Bank is one of Nevada’s banks that make SBA loans. With an SBA loan, the federal government guarantees 35 percent of the loan amount. In 2018, Meadows was Nevada’s number one SBA lender.
Nevada also offers a program for challenged borrowers. For three years, John Pinnington dreamed of one thing, expanding his business, AA Printing. The company handles signs, pamphlets and documents, but was referring t-shirt customers somewhere else. His business didn’t have the means to purchase the necessary equipment, the inventory and other costs associated with adding those services and John was aware he didn’t qualify for a conventional loan.
There are many small businesses who face circumstances just like John. They can’t grow without access to capital. That’s why the Nevada Opportunity Fund was created during the 2017 legislative session. The fund helps provide small business owners, primarily those unable to meet conventional standards, access to funding. The funds are available through GOED and Bank of Nevada applied for, and won, the position of administrator of the funds. All loan applications are reviewed by a team of underwriters at GOED.
In April of 2018, John Pinnington was the first small business owner to receive a loan from the Nevada Opportunity Fund. His goal is to hire three new employees. Those hires are a great example of how lending fuels growth.
“Basically, banks create taxes,” said York. “We can lend $10 for every $1 of capital that we have. So, for our capital position, or equity position, that our shareholders give us in the bank, we can take that and say we have $10 million in equity. We can lend ten times that.” That’s a possible $100 million in economic development.
This gives industries the opportunity for new capital with which to expand, hire new people in new locations, buy equipment and improve revenues and therefore jobs.
“There’s also some stats that, for every $100,000 in new loans, we create five jobs. That means for every million dollars we’ve created 50 jobs,” said York.
Banks not only help businesses employ more people, they are employers themselves. Federal Deposit Insurance Corporation (FDIC) data shows nearly 7,000 bank employees in the state of Nevada. In addition, total payroll and benefits to bankers in Nevada exceeds $445 million annually.
Eventually, however, people retire or move and there’s a need to educate tomorrow’s bankers today.
In a world where many of the people working in the industry have gone away, so have many of the traditional education programs. “So, we’re trying to create a new way of teaching the next generation.” said York.
One way to do that is by reaching students. York is helping to create a certificate program at College of Southern Nevada, called Foundations of Banking. While York was chair of Nevada Bankers Association (NBA), he led the organization, and its members, in working with a professor of finance to create a banking program at UNLV. The first 30 students are about to graduate from that program. NBA members quickly saw the importance of the program and more than 13 banks joined the advisory committee. Their participation helped create the appropriate coursework and provide intern opportunities. The program is for finance majors and is completed during a student’s junior and senior years, including a required internship. Graduates who want to work in banking have an obvious advantage. And, those who elect to work in a finance department or start their own business have the benefit of understanding how to maximize a business’ relationship with a bank to better position their company for success.
Financial Literacy and Education
Another way banks reach out to their communities is by teaching adults and youth financial literacy.
“Bank of America offers free Better Money Habits workshops to people of all income levels, ages and backgrounds,” said Al Welch, president, Bank of America Las Vegas. The workshops are tailored to meet the needs of the people taking them, depending on their goals.
Until recently, financial literacy wasn’t built into public school education, leaving students to graduate with little information about savings, loans, credit or how to acquire any of those. In 2017, NBA, along with stakeholders that included student sponsors, helped get legislation passed to change that. All Nevada schools are now implementing financial literacy into their curriculum beginning in third grade. In addition, for a student’s senior year, an entire semester is devoted to economics so they are better prepared for the future.
Bankers in Nevada are also working to bridge educational gaps. Heritage Bank has taught financial literacy at Sparks and Hug high schools in Northern Nevada and Valley Bank has worked with Green Valley High School not just on financial literacy but also with putting their best foot forward with regard to bank accounts, said York.
Nevada Bank and Trust personnel teach financial literacy and awareness of elder abuse at senior centers, along with information on what actions seniors can take if they’re encountering such abuse.
Hafen has found operating in rural areas like Ely and Lincoln County that a town hall-like seminar is a good way to teach business owners the importance of cyber security and cyber awareness.
For businesses, financial literacy might look like economic information. Nevada State Bank shares monthly snapshots of the state’s economy, provided by Applied Analysis, and publishes Nevada Small Business Survey Report which reflects an overall outlook for small businesses based on a survey of small business owners statewide.
“It helps people understand the perspective of others within the community and provides good value-added information [to the business community],” said Kirkland. Nevada State Bank also curates NevadaSmallBusiness.com, a digital resource center for business owners.
Charity Begins at the Bank
Banks donate funds, resources and volunteer hours in the communities where they do business. NBA estimates members donate over $25 million each year in charitable contributions and over 113,700 volunteer hours.
“A community bank should be involved with the community,” said Wilmoth. So in Heritage’s locations in Northern Nevada, they work with the homeless and people needing a hand. That included sending a group of homeless families for a day to Six Flags in California and creating a community foundation to provide low income housing so the working poor don’t wind up living in their cars.
Bank of Nevada, Meadows Bank and Nevada State Bank are all involved with Green Our Planet, a non-profit organization that has placed gardens and hydroponics programs on more than 160 school campuses.
“The gardens are the hardware and the curriculum is the software,” said Guedry. The program encompasses STEM education – Science, Technology, Engineering and Math – and teaches students financial literacy. Students work the gardens and sell produce at their own farmer’s markets, learning to understand budgets, profits and losses.
Nevada State Bank and Bank of Nevada are both involved with Junior Achievement’s Finance Park, a month-long program that teaches K-12 students the fundamentals of budgeting, understanding credit scores and investing.
Guedry and Bank of Nevada are also involved in the Business + Education (BE) Engaged Summit, which brings business, education and community leaders together to focus on student achievement. Meadows Bank has worked with Juvenile Diabetes and Candlelighters (Childhood Cancer Family Alliance) and Nevada Children’s Fund. Nevada Bank and Trust works with Three Square Food Bank, Valley Bank works with Boy Scouts, Heritage works with Head Start, Nevada State Bank works with Three Square, American Heart Association and the Nevada Partnership for Homeless Youth, and many NBA members participate annually in Teach Children to Save Day.
“The area where we focus most of our charity work is education, predominantly K-12 and some higher ed,” said Guedry. That’s good for the community because data shows the higher the education level of the workforce, the less need for safety net services.
In many cases, bankers are able to assist at the ground level of community needs. Bankers are invested in seeing Nevada communities and businesses succeed.