Aug. 9--In this banking climate, some community banks just can't win, no matter when or how the economy improves, analysts say.

It won't be a total bloodbath for these banks in Southern Nevada, but it might come close.

Some will find themselves on the economic casualty list in a year or two, mostly due to lack of capitalization. Some may even be mortally injured from a lack of business due to newly tightened lending standards, overzealous bank examiners -- the ones making up for lost time -- and the higher interest rates that will undoubtedly show up should the economy improve too fast.

It's an almost unavoidable double-edged sword that cuts both ways.

Many community banks can withstand an economic slump of 12 to 18 months, said John Guedry, who recently resigned as executive vice president of City National Bank to consider a run for Congress.

"Those that are well-capitalized should come out of this in very good shape," he said, mentioning Service1st Bank and Meadows Bank as good examples.

But those that do survive will likely "have battle scars," he predicted.

"I'm sure some of the weaker banks will not weather through the next 12 to 18 months, especially if it (the economy) gets worse," Guedry said.

Timothy Coffey, vice president of research for FIG Partners, a stock brokerage specializing in banks, predicts the area will have fewer small, independent banks, regardless of whether the economy rebounds or remains mired in a downturn.

If Southern Nevada continues to suffer malaise, more banks will fail, Coffey concludes.

"But if we have a quick snapback in economic activity, we're going to have so much inflation, tempered by rising interest rates that slows down demand for bank loans," he said.

"What it means for the banking companies is there is going to be fewer whether (the economy) improves short term or long term," Coffey said.

A consensus of economists surveyed by the Western Blue Chip Economic Forecast at Arizona State University predicts an anemic recovery next year for Nevada, with 1.5 percent population growth and a 1.6 percent increase in gross gaming revenue. The consensus also predicts a 1.7 percent increase in personal income and 0.3 percent increase in single-family housing permits.

Dale Gibbons, chief financial officer of $5.7 billion-asset Western Alliance Bancorporation of Las Vegas, sees good and bad things ahead for community bankers.

"On the positive side, a lot of our irrational competitors have been taken out," he said.

Banks no longer find themselves competing with institutions with lax lending standards and low requirements for down payments for loans, he said.

"You had pressure to underwrite too loosely" to make loans, Gibbons said.

Three Southern Nevada banks have already disappeared in the past year.

First National Bank of Nevada failed a year ago with $3 billion in deposits, mostly in Nevada and Arizona. State and federal regulators seized $1.7 billion Silver State Bancorp in September. Regulators turned off the lights at $132 million-deposit Security Savings Bank in March.

Community bankers need not worry about those maverick institutions.

"The flip side of that," Gibbons said, "is we've got much lower economic activity and the outlook is going to be much lower for a long time to come."

Edward Jamison, chairman and chief executive officer of $1.7 billion-asset Community Bancorp, offered a sobering outlook.

"If we continue to see the economy free fall as we have since September 2008, banks will be under tremendous stress for profitability and potentially viability with enhanced capital requirements and regulatory oversight," Jamison said in a statement. "There may be fewer banks in the market to service the community as it moves out of this economic cycle."

Another analyst, who spoke anonymously, said: "In the long term, the survival of community banks in Southern Nevada is very good. But in the short term, there are going to be some banks that are going to wither.

"If this goes on for a long time, there will be a lot fewer community banks," the analyst added.