2020 outlook: Nevada's surging economy means big business for bankers

RENO, Nev. — Regional banks enjoyed a strong year in 2019, buoyed by Northern Nevada's surging economy. That is expected to roll into the New Year and beyond.

Stan Wilmoth, president and chief executive officer at Heritage Bank, says 2019 was a wonderful year for Northern Nevada, especially with what's been going on in California and elsewhere.

The influx of residents coming into Northern Nevada over the past few years, particularly from people abandoning the higher cost of living associated with the state of California, has led to growth for Heritage and other banks.

“We all benefit either directly from new businesses banking with us or from our current customer base experiencing growth,” Wilmoth says. “Those two factors combined have had a good effect on banking.”

Stan Wilmoth

Nevada State Bank enjoyed its 60th anniversary on Dec. 9. It's been a positive year across all banking sectors, says Rick Thomas, senior vice president and northern Nevada executive for Nevada State Bank.

“We continue to have job growth, and even though we have seen a little dip in job growth we are still well ahead of the national average,” Thomas says. “We have healthy consumers with good credit quality. All those things for spell good growth opportunities for us.”

Nevada State Bank enjoyed stable deposit and loan growth throughout 2019, and the continued migration into Nevada from new residents and businesses should lead to additional increases in both sectors in 2020, Thomas says.

Nevada's favorable business and personal tax climate provides many opportunities for Nevada State Bank to grow both its deposit base and lending options.

“Business are expanding, and they need new equipment and space. When business are stable, they are going to grow and feel more comfortable investing in the future,” Thomas says.

Like other regional bank, commercial lending is a major component of Nevada State Bank's fiscal health. The bank is targeting manufacturing as a key avenue of growth.

Rick Thomas

“Manufacturing growth diversifies our economy, and as a bank we are really eying the manufacturing growth here and looking at ways we can grow accordingly with (the sector),” Thomas says. “All segments in commercial and industry are doing well, and we are pretty broad based in our growth.”

Commercial lending remains Heritage Bank's strongest line of business. The bank lends to regional homebuilders who expected to continue developing land throughout the new year, Wilmoth says. The shortage of newer mid-sized commercial buildings also could lead to additional lending opportunities for Heritage Bank.


While 2019 was a bullish year for regional banks, the uncertainty of the pending election in November could damped some of the region's explosive growth.

The many wider geopolitical issues, such as the U.S.-Mexico-Canada trade agreement and tariff tiff with China, coupled with domestic political turmoil, could potentially derail or at the least delay continued investment throughout the region.

“Anytime businesses see uncertain in Washington, it causes them to either slow down on the purchase of assets or expansion plans, or even stop them until there is some resolve,” Wilmoth says. “That's one of the main areas of concern for Northern Nevada — regardless of whether (the President) is a Democrat or a Republican, there will be some uncertainty in 2020.”

A potential change in national leadership in November could affect consumer and business confidence, Thomas notes. Although that's a metric that's difficult to gauge, it likely will cause some hesitancy for businesses facing key financial decisions.

“Obviously we have lots of pros here (in Nevada), but with businesses, when there is change, there's concern about how those changes will affect them,” he says. “In the overall picture, it's another factor that has to be added to decision making that can cause delays on whether you make an investment or how you manage expenses.”

Paul Stowell, Nevada regional executive for City National Bank, says historical data shows it really doesn't matter who gets in the Oval Office — markets continue to chug along regardless.

“When you look (broadly) at financial markets, it doesn't matter if it's a Republican or a Democrat — the economy still moves along,” he says. “Consumers continue to spend, and that is really what drives the market.

“Consumers make up 70 percent of economy, and that is why we are doing so well,” Stowell adds. Consumers are ignoring all of the chatter and continue to stimulate this economy.”

Lori Haney

Lori Haney, senior vice president and group manager for Northern Nevada for City National Bank, says there could be a modest slowdown in business banking as companies wait to see who is elected. Businesses want to know who will be shaping policy before determining the direction of their spending.


The banking industry has been under a bit of pressure from fluctuating interest rates, which forces margins down, regional executives say. However, Northern Nevada banks are well positioned to weather a recession due to certain factors that weren't in play the last time the economy tanked.

Thomas expects that if there is a recession, there's a good chance Northern Nevada will outperform the nation based on its increased diversification, growth, favorable tax climate, lack of state income tax and the quality of life enjoyed by residents of the Truckee Meadows.

That's in stark contrast to the bleak years of the Great Recession, which pummeled Northern Nevada and the rest of the state for an extended period that carried on much longer than the rest of the country.

“A recession can happen at any moment, but I think everyone is recession-proven,” Thomas says. “After going through those adjustments, there is a healthy consciousness and awareness that causes businesses to be more prepared (for a recession) in the future.”

Heritage's Wilmoth expects opportunity zone development to come into play in the coming year as well. Locally, Heritage Bank's Midtown location, along with hundreds of other businesses, are located in an opportunity zone that extends from the urban core all the way to Tahoe Reno Industrial Center.

“Having Park Lane and a wide swath of property going through the middle of Reno in an opportunity zone should bring in a lot of investment money from people who want to get into this market,” Wilmoth says. “Since investors have to leave the money invested for 10 years (to get the full tax treatment), you want to invest in an area that offers both tax deferral and asset appreciation.

“Northern Nevada still some runway left for increased asset values due to strong regional demand for housing and new commercial properties.”

Rob Sabo is a Reno-based freelance writer and former reporter for the Northern Nevada Business View.


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