The nation's fastest-growing big city is also the hottest market for start-up banks.
Seven have opened in Las Vegas this year — one more than in the previous five years combined — and at least six others are in various stages of organization, according to state and federal regulators. No other city had as many as five banks open within its borders this year.
Some bankers and other observers say they are concerned that the market is getting crowded, and that growth prospects for some new banks are limited, especially with the region's once-red-hot housing market starting to cool a bit.
Others, though, maintain that Las Vegas can continue to support more banks, because commercial construction is booming, and the city is projected to add another 1 million or so people over the next dozen years.
"We didn't have any trouble raising $50 million in capital, and we could have easily raised $100 million, because the growth projections are so good," said John Dedolph, the chief executive of the $120 million-asset Service1st Bank of Nevada, which opened in January.
Stephen M. Miller, a professor and the chairman of the economics department at the University of Nevada, Las Vegas, said that housing construction in the region has slowed but is expected to pick back up once the current inventory is absorbed by the continued influx of people.
Las Vegas and the surrounding areas in Clark County remain one of the fastest-growing markets in the country; next year alone, the county's population is projected to rise another 4.6%, to just over 2 million, according to Clark County Comprehensive Planning.
"A lot of people retire here because of the weather and because there is no state income tax, and a lot of California businesses are relocating to avoid taxes," Prof. Miller said. "When you add a lot of people, you also tend to open up more Wal-Marts, grocery stores, and pharmacies," creating more business for banks.
In addition, commercial development in the region should be spurred by the expected construction of 46,000 hotel rooms in and around casinos along the city's famous Strip over the next four years, he said.
Elisabeth Shurtleff, a spokeswoman for the state's Financial Institutions Division, said the continued growth of Las Vegas' economy makes the pie large enough to support more banks in the market.
"Also, there's been a lot of mergers and acquisitions in the banking community, and that's opened up a vacuum at the community bank level — which is why we're seeing more banks open up at this point," Ms. Shurtleff said.
Moreover, Las Vegas has become home to a burgeoning Asian-American community, and two banks, First Asian Bank and Nevada National Bank, opened in June to serve that community, Ms. Shurtleff said.
Lu Cheng, CEO of the $22 million-asset Nevada National, a unit SWNB Bancorp Inc. of Houston, said that over the last several years more Asian-Americans, particularly Chinese-Americans, have moved to Las Vegas from either coasts, either to retire or to open businesses in a concentrated area west of the Strip. Many of these people also are investing in land in and around the small town of Pahrump, about 40 miles west of Las Vegas, anticipating that a commercial and residential building boom will happen there, Ms. Cheng said.
Mainstream banks also are vying for that community's business, she said, but a bank like hers can distinguish itself there more easily.
"We speak their same language and have the same cultural background, so that's why we feel we have a special niche," Ms. Cheng said.
Out-of-town banks, too, are clamoring to get into Las Vegas. This year the Asian-American-owned First International Bank of Plano, Tex., opened its first out-of state branches in Las Vegas and nearby Armagosa Valley, and it plans to open one in Pahrump.
Service1st's Mr. Dedolph said that competition among all banks is fierce. He said that his bank recently hired four business development officers and is compensating them for bringing in core deposits along with loans. "If you can grow deposits, everything else will take care of itself."
Most new banks target small-business owners, but Mr. Dedolph said his bank came out of the gates with enough capital to go after more middle-market customers, offering higher loan limits, cash management services, and commercial and industrial loans. The typical bank start-up has much lower limits and often books more risky commercial real estate and construction loans to leverage its capital quickly, but the loans may come back to bite the bank if credit quality deteriorates, he said.
Still, the top executives at one established banking company questioned whether the market can support all the new banks in the current operating environment.
"There's only a limited number of transactions available, so everybody's fighting over the same bone," said Edward M. Jamison, the CEO of the $1.7 billion-asset Community Bancorp in Las Vegas. "As to the seven new banks, I wish them luck. Those with strong management teams will survive," particularly if they are not tempted to book risky loans just to expand their balance sheets or offer excessive rates to get deposits.
Robert C. Ollech, a managing principal of Fortress Partners Capital Management Ltd. in Hartland, Wis., said that Citigroup Inc. and Washington Mutual Inc. together have more than 80% of the deposits in the Las Vegas market, so nearly four dozen banks are battling for the rest.
"Some of the more well-managed ones will be able to grow, but many will hit a wall at about $60 million to $70 million in assets," Mr. Ollech said. "Then they will get to a point where they have to ask themselves whether they are better off trying to sell themselves."
