Credit card changeover is both expensive, slow

Credit card swiping at checkout is slowly being phased out in Southern Nevada.

As part of a dramatic shift in how consumers pay for their purchases, local community banks have been issuing new credit and debit cards aimed at reducing fraud.

Valley Bank of Nevada has already issued new EMV — or Europay, MasterCard and Visa — credit cards to most of their clients and now are in the process of testing their new debit cards. The new EMV cards are embedded with a microchip to secure point-of-sale transactions by producing a single-use code.

H. Scott Johnson, Valley Bank’s CFO, told the Las Vegas Business Press the cards cost on average about $3 each, which is more than double the old magnetic striped plastic credit card. He said Valley Bank controlled its costs by participating in a pilot program with its card issuer.

“We were affected by fraudulent transactions,” Johnson said. “Any fraud is difficult for both the bank and our customers.”

Johnson declined to discuss how Valley Bank was impacted by specific data breaches, including those affecting Target and Lowes customers.

Johnson expected the bank to be “100 percent EMV compliant by the second quarter of 2016.” But, he said, the bank is finding there are few retailers in Southern Nevada who have turned on their terminals or have even installed the EMV card readers. So far, about 40 percent of the transactions with Valley Bank credit cards are using EMV, Johnson said.

He added there was still some employee training to do in the retail industry, while customers need to understand the transaction takes a few seconds longer to process than a magnetic strip transaction.

Johnson said Valley Bank hasn’t received any negative comments about the ongoing changeover to EMV chip credit and debit cards. He said Valley Bank expects a “25 percent to 35 percent decline in our total losses” due to credit and debit card fraud.

Henderson branch a win

James York, president of Valley Bank, says the bank’s move to open a second location in Henderson is paying off with $5 million in loans and $1 million in deposits since opening on July 1. Valley Bank’s only full branch is in North Las Vegas.

“So far it looks like a good market,” York said of Henderson. “We are not a full branch. We are just a loan office that needs to have $10 million to $15 million in the books before we can open a full branch.”

York said if the branch can sustain its growth for a “couple of more quarters, then we’ll be in good shape to open a full branch next year.”

York, who had been working on finding and then opening a second location for three years, said it took $2 million from about a dozen investors before Valley Bank opened its Henderson office.

“That’s going to mean long-term success,” the veteran banker said. “I think we’ve done it right. The community has been patient as we have come through this recovery.”

Wells Fargo top SBA lender

For small businesses in Southern Nevada, it’s a good time to borrow money, at least if those loans come with the federal government’s backing.

The volume of Small Business Administration (7a) lending by banks in the region was just short of $200 million during the fiscal year that ended Sept. 30, according to data from the SBA’s Nevada district office.

Sixty banks and credit unions made 553 SBA 7 (a) loans for $190 million in the Nevada district. Wells Fargo was the top SBA lender in Nevada, followed by U.S. Bank, JP Morgan Chase, Meadows Bank and Nevada State Bank.

Wells Fargo, who was the nationwide leader in SBA loans for the fiscal year, issued 136 loans with a value of $35.1 million. But second on the list in terms of loan volume was Las Vegas-based Meadows Bank, with $26.5 million on 29 loans.

“It’s really a tool for us to help meet the needs of companies that are in transition,” said Calvin Regan, senior vice president and SBA division manager with Meadows Bank. “We focus on startups to companies that are 5 years old.”

Regan said these loans help grow the bank’s core deposits and provides an opportunity to convert the borrowers into Meadows Bank customers. He said the biggest request for startup loans is for franchisees, especially for people who have left the corporate world or veterans — all people with “great management skills.”

Meadows Bank operates branches in Las Vegas, Pahrump, Henderson and Reno. The bank, with assets of $484.5 million, also operates SBA loan offices in Nevada and five other states.

Amodei supports Ex-Im

Authorization for the Export-Import Bank expired on June 30, leaving the federal agency in limbo as it continues to service loans made to companies doing business overseas. The 81-year-old federal agency also supported businesses with loan guarantees and insurance.

Opponents, including Rep. Joe Heck, R-Nev., say reauthorizing Ex-Im is just continuing a program that is nothing more than corporate welfare. They also argue that the bank does what private investors should be doing.

But Rep. Mark Amodei, R-Nev., has come out in support of reauthorizing the Export-Import Bank, and has joined a bipartisan coalition to force a vote on the House floor. As of the Business Press’ deadline, no vote had been scheduled.

Amodei said when the bank’s reauthorization expired, it left Nevada businesses without the financing tool. Since 2007, Ex-Im authorized and insured $180 million in export value in Nevada.

“Ex-Im creates American jobs. It creates Nevada jobs,” Amodei said. “And it does so while generating billions of dollars for the U.S. Treasury. Since 1990, Ex-Im returned $7 billion more than its appropriations.”

He argued that Ex-Im wasn’t corporate welfare, but instead described the agency as a “success story.” Amodei said that every day “we don’t reauthorize it means Nevada jobs are on the line.”

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