Music City’s newest bank executive is Russell Goldsmith, chairman and CEO of Los Angeles-based City National Bank, which just opened on Nashville’s Music Row.
The big-city bank is here, in large part, to offer financial services and loans to the music industry — from performers to business agents to concert tour operators.
Goldsmith said the time was ripe to open a Nashville office. The bank has long worked with the music and film businesses on the East and West coasts.
“It’s helpful to have offices in New York, Los Angeles, Las Vegas and now Nashville. An entertainer here could be doing a movie in L.A., or performing live in New York or doing a concert in Las Vegas,” Goldsmith said while in town for the opening of City National’s 54 Music Square East branch last week.
City National’s roster of clients includes talent agencies, law firms, accountants, business managers, performers and others with links to the entertainment industry. It’s among the nation’s Top 50 financial institutions, weighing in at $22.5 billion in assets.
As CEO, Goldsmith also has become a national voice in support of targeted federal spending, particularly on roads, bridges and transportation to create jobs beyond his own industry. He chairs a jobs committee in Los Angeles that examines strategies to reduce unemployment.
“(The jobs plan) the president has put forward is headed in the right direction,” Goldsmith said. “In the short run, we need to stimulate the economy; … Keynesian economics is not dead. Long-term, we need a coherent deficit reduction plan.”
Goldsmith said lack of confidence is holding back many businesses from hiring.
Loan demand from small and midsize businesses remains weak, and thousands of construction workers clog the unemployment rolls in many states.
“The challenge in a tepid economy is not so much whether banks have the desire to lend … but it’s loan demand. If small and mid-sized businesses don’t have confidence about the future, they sit on cash, they don’t hire and they don’t expand.
“At City National, we’re making loan commitments to our creditworthy clients, but (some) are hesitating for all sorts of reasons. They don’t buy the warehouse and rehabilitate it or expand production. We’ve got to get confidence back at a higher level.
“One of the things the president wants to do is expand funding for the Transportation Infrastructure Finance and Innovation Act, which is something I’ve been encouraging in my role as chairman of the Los Angeles Area Coalition for Jobs and the Economy,” the banker said.
Opportunity in NashvilleIn Southern California, voters approved a special half-cent increase in the sales tax in 2008 to fund transportation projects in Los Angeles County, and Goldsmith said that could create a spark.
“If we can get some additional money from TIFIA, we literally have shovel-ready projects with plans (ready to go). So, with a small percentage of federal loans and other things … we could build projects in 10 years that would otherwise take three decades to complete.
“To me as a banker, that’s what you do. You lend against cash flow, particularly with so many unemployed construction workers. We don’t want bridges to nowhere or congressional pork. But we do want true impact — subway systems in dense environments, an improved electrical grid, roads being repaired.”
Goldsmith acknowledges that politically it may be tough to get much new federal stimulus through Congress, where Republican opposition to what many see as runaway government spending remains fierce.
For its part, City National has added roughly 200 jobs nationwide in the past year. The branch here will employ 17 people.
“We see a lot of opportunity in Nashville,” Goldsmith said.
City National’s loan portfolio, like that of many banks, took losses in California real estate lending, but recent quarters have seen improved loan quality, fewer charge-offs and more recoveries as properties taken back by the bank are resold.
“Basically, our loan portfolio, all things considered, held up extremely well except for … residential real estate development. We never made sub-prime mortgages, but we did lend money to the guy who’d build 10 homes for $1 million each.
“When the bottom fell out, those suddenly became $600,000 homes and couldn’t get sold,” Goldsmith said. “But, for our purposes, the worst is absolutely over, and we see a more normalized picture going forward.”
