Noncasino corporate loans are becoming increasingly prominent in BankAmerica Corp.'s portfolio in Nevada.
The state's two largest cities-Las Vegas and Reno-are synonymous with gambling, and loans to that sector have historically dominated. But the Charlotte, N.C.,-based banking company is seeking to lend more in manufacturing, distribution, and service industries.
"While gaming has been the engine driving this economy, we are seeing different companies come here for a myriad of reasons," said George W. Smith, BankAmerica Corp.'s Nevada area executive. "A lot of our growth is coming from industries outside the gaming sector."
To be sure, casino loans-usually multimillion-dollar syndications-are larger than other corporate loans. BankAmerica held more than $2.3 billion in loan commitments to the gambling industry in 1998.
But demand for other corporate loans-credits of $1 million or more-has surged. In 1994, only 20% of all loans made by BankAmerica in Nevada were to nongambling firms. But in 1998, 65% of Nevada corporate loans went to companies outside the casino industry, Mr. Smith said.
BankAmerica, the biggest bank in Nevada, has seen two consecutive years of record increases in nongambling corporate loans in the state. It made nearly $400 million in Nevada last year, a 5% increase over 1997.
Wells Fargo & Co., the other major lender to the gambling sector in Nevada, is also seeing an increase in loan demand outside the casino industry.
"There is a lot more opportunity to do nongaming corporate lending," said Jay Kornmayer, a Wells Fargo & Co. senior vice president responsible for Nevada and gambling lending. "A tremendous number of new businesses are being formed here, and a lot are relocating from outside the state."
R. Jay Tejera, an analyst with Dain Rauscher Wessels in Minneapolis, said Las Vegas has been the fastest-growing locality in the country for seven years running.
"You are seeing a lot more than just high rollers coming in from out of town to gamble," he said. "With all the nongambling growth, a lot of banks are trying to increase their exposure in new and different ways."
Several factors are driving the surge, observers said. In the past 12 months, the job growth rate was over 6%, well above the national average of 2.3%, according to the Bureau of Labor Statistics.
Nevada's lack of a corporate income tax, demands for goods and services created by a rapidly growing population, and Las Vegas airport's status as a hub also are attracting midsize businesses, Mr. Kornmayer said.
