As CEO of City National Bank, Russell Goldsmith is a "banker to the stars." He finances movie production studios, music labels and talent agencies with clients in Hollywood, New York and Nashville, Tenn.
But entertainment isn’t his only line of business. City National, which has six branches in the Las Vegas Valley, also bankrolls real estate projects, issues government-backed loans to small businesses and manages investments for wealthy clients.
As other banks incurred heavy losses during the recession and, in many cases, shut down, Los Angeles-based City National remained healthy.
Its parent, City National Corp., earned $52 million of net income in 2009, a steep drop from $232 million in 2007, but still profitable. It has not posted an annual loss in two decades.
Goldsmith — preceded at the bank's helm by his father, Bram, and his grandfather, Ben Maltz, a bank co-founder — has grown City National’s presence in Nevada mainly through acquisitions. His company bought Business Bank of Nevada, which had seven branches statewide, in 2007 for $167 million. In 2010, City National acquired the failed Sun West Bank, which also had seven branches, and last year it absorbed the failed Nevada Commerce Bank, which had two branches.
Goldsmith recently sat down with VEGAS INC in the bank’s Summerlin offices to talk about local operations.
How does Las Vegas compare with other markets City National is in, such as Southern California and the San Francisco Bay area?
City National has the bulk of its offices in Northern and Southern California, and those economies are obviously doing better than Nevada’s. Northern California, from San Jose through San Francisco, is probably the best in the United States. Southern California is seeing its economy improve, though not as dramatically as the Bay Area. The unemployment rate is higher in Nevada, and there are fewer drivers of the economy here, but also the economy in Nevada is smaller to begin with.
Does City National lend to casino companies?
We work with some gaming companies, but we’re really aimed at small and mid-sized businesses. Companies from $500,000 in revenue to $50 million would really be our sweet spot. The large gaming companies like MGM Resorts International, Wynn Resorts Ltd. or Las Vegas Sands Corp., they’re going to be playing with the mega-banks.
What kind of loan demand are you seeing for commercial real estate projects in Southern Nevada?
It’s pretty modest, even in California, but you’re also seeing investors buying properties. General Growth Properties just sold its Las Vegas office portfolio (32 buildings at 1.1 million square feet) to Hines Interests and Oaktree Capital Management. That’s a good sign. Nevada is lagging behind the rest of the country, but housing is picking up and commercial real estate is picking up.
Commercial construction is basically at a standstill in Las Vegas, with only a handful of projects under way. How does that affect City National?
Our portfolio has shrunk dramatically because, as you say, there just hasn’t been much construction going on. But we’re financing some multifamily projects around the country and some housing and retail. Things are starting to pick up. The stalled Howard Hughes project next to our headquarters here, the Shops at Summerlin, that’s going to restart. We’re coming out of the worst recession since the Depression, and people need to be realistic about what it takes to come out of something like that. It doesn’t happen fast.
City National is known as the "bank to the stars." Is there any entertainment lending you do in Las Vegas?
Las Vegas obviously has a lot of entertainment happening here, but you don’t see deeply rooted entertainment companies. Some of the performers here are banking with us, so having offices here and the ability to help them out comes in handy, but it hasn’t been a big piece of the business in Las Vegas.
City National grew a lot here by acquisition. What is your strategy for growth in this area?
First, we don’t see ourselves as a completely retail bank. We’ve never tried to have a branch in every supermarket or every corner, and I don’t think our clients need that. People are coming into branches less and less. We’re investing much more money in technology than bricks and mortar.
Even if you don’t grow your branch network here, what about loan growth? Is that possible?
We’re very committed to growing our loans. Through the whole recession, we continued to make loans, but the key to loan growth is really two things: You’ve got to have loan demand and credit-worthy borrowers. When you have both, we’re very, very interested in making those kinds of loans.