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A steady hand at tiller – Nahra to lead bank trade group

By   /   Sunday, June 14th, 2009  /   Comments Off on A steady hand at tiller – Nahra to lead bank trade group

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Lynda Nahra gets things done quickly.

During nine years as president and chief executive at Community West Bank, Nahra has grown the bank’s assets to $683 million, developed the Small Business Administration lending division into a nationwide network of offices and added branches in Santa Maria, Westlake Village and downtown Santa Barbara.

Now one state banking trade association has placed her at its head, hoping she can make her 35 years of experience work for it, too. The California Independent Bankers board voted Nahra in as president in January; by June, she had already absorbed the membership of Community Bankers of California, a 50-year-old group of more than 90 institutions.

Nahra said the combined membership will fight for the recognition of how community banks across the state positively impact regional economies.

“It is one of the best times to lead an organization representing community banks,” she told the Business Times. “Through the financial industry chaos, community banks have remained the responsible lenders driving their local economies.”

Paul Rodeno, president of the Community Bankers of California, said the union “not only creates a stronger voice within the respective California communities, but throughout the country.”

One message that Nahra wants to spread as president of the California Independent Bankers is that most community banks are strong, low-risk lenders.

“Although we are feeling the aftershocks of the megabank and Wall Street mess, community banks were not responsible for originating the risky loans that hurt our economy,” she said, noting that Community West Bank originated $52.6 million in loans in the first quarter of 2009.

“Typically, community banks did not engage in the high-risk lending practices or get involved in the equally high-risk and misunderstood financial instruments that caused much of the chaos in the financial markets,” Nahra said.

Loan availability is a popular topic for banks all across the Tri-Counties. Most regional financial institutions were approved for capital injections through the Treasury Department’s $700 billion Troubled Asset Relief Program intended to help banks thaw the credit market by increasing lending activity.

“The backlash from the one or two entities who allegedly misused TARP funds did significant reputational damage to the community banks who deserved the funds and used them as intended,” Nahra said. “The funds Community West Bank received from the U.S. Treasury was not a blank check, a grant or a gift, as many like to portray. Instead, it is an investment by the Treasury Department, in exchange for preferred stock, that must be repaid.”

She said that as an investor, the Treasury has the potential to make billions of dollars as banks pay for the use of the money, not to mention a considerable profit as the stock value of participating banks increases.
Nahra likes to think of the federal money as an investment in healthy banks, not a bailout of the weak. “This much-maligned program actually has significant upside potential for the bank, the Treasury and the taxpayer,” Nahra said.

In December, Community West Bancshares received $15.6 million in federal funds. Nahra said this investment has allowed the bank to increase the flow of credit to businesses and consumers. Since the bank received the funds on Dec. 19, Community West funded $92 million in loans.

“We face a tough economy in which most people feel some impact, whether that is the loss of job, decreased income, declining net worth or just plain lack of consumer confidence. There are less qualified borrowers. Add to that the increased pressure on banks to maintain higher capital ratios than was historically required, and banks are likely originating less loans then they did a year ago,” Nahra said.

Any bank that has made loans secured by real estate faces some possible detrimental impact as a result of declining real estate values, Nahra said, adding that a little patience and a willingness to compromise could improve the situation.

“If bankers, regulators and borrowers could work collaboratively and not immediately assume the worst-case scenario, those impacts could be significantly mitigated,” Nahra said.

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