Jason Awad has worn many hats over a long career in Sin City; now he is trying his banking cap once again.
A Las Vegas trial attorney, Awad said last week that he had bought a significant stake in First Security Bank of Nevada, a struggling $106 million-asset bank.
Awad said he is giving banking another shot because it was so fruitful to him last time, when he was the chairman of the $500 million asset Business Bank of Nevada, which sold to City National Corp. in 2007 for four times its tangible book value.
"We sold and then the recession hit and Vegas was hit hard. I've been looking for ways to get back in, we did some due diligence on several, passed on a number that eventually vanished," Awad said in an interview last week. "We feel lucky that we were able to find a recapitalization that worked."
Awad has been hunting for a community bank for almost a year. In October 2010, an Awad-led investor group agreed to buy 1st Commerce Bank in North Las Vegas from Capitol Bancorp Ltd. Awad said the seller was unable to meet certain conditions and the deal was terminated earlier this year. A call to Capitol was not returned. Banking observers say that while capital remains hard to come by, Awad's story represents of growing interest in community banks by entrepreneurs.
"There are a lot of entrepreneurs that are beginning to realize that banking might be the only place to find growth over the next few years only because the valuations are just so excessively low right now," said Christopher J. Zinski, a partner at Schiff Hardin LLP. "Clearly, they are looking for the upside potential and they usually go to a geography that is a good one for future growth."
That is how Awad sees Las Vegas, he said. His view is not based on optimism or economic forecasts. He has his ear much closer to the ground; specifically the Las Vegas strip, where he owns a taxi, bus and limousine firm. His transportation business is up 9% to 10% from a year earlier, he said.
"The town is doing well, it is slow but nevertheless I see it in recovery mode," Awad said. "So I don't listen to the pundits that do not live here."
Still, he is not expecting the robust growth he oversaw at Business Bank. While chairman, that bank grew from $80 million in assets to $500 million in assets in a few years before the sale. At First Security, he wants to hit $300 million to $350 million in five years.
The growth at Business Bank and other Nevada banks during the boom years of the early 2000s were unsustainable, anyway, Awad said. "You would buy something for half a million dollars and sell it three months later at a million," Awad said. "We were living on steroids."
First Security needs some work before it grows. At June 30, the bank was undercapitalized and a fifth of its assets were nonperforming. The $14 million infusion that Awad led brought the bank's total risk-based capital ratio to 20%, giving it a thick cushion to deal with the problems.
Awad said he wants to aggressively dispose of the bank's $6.1 million of foreclosed property and restructure as many of the nonperforming loans as possible by Sept. 30.
He is also laser focused on rebuilding the bank's culture. "You need your people to be proud of where they are working. They need to be your advocate," Awad said. "I want this bank to have a culture where its employees are proud to be a part of it."
While Business Bank fetched a handsome premium, it wasn't always that way. Awad was a director when that bank was hit with a memorandum of understanding for asset quality issues. That's when he began to step up, eventually becoming chairman. At the time of its sale to City National, analysts referred to it as a high-performing bank.
"I told the fellow board member let's take control of this bank and change direction and we did," Awad said. "That's what I hope to do here."
