72.9 F
San Diego
Thursday, Sep 28, 2023

Businesses Still Running Under Caution Flag in Slow Recovery

It’s spring, which means time for many banks to release surveys of their small business clients.

In the past two weeks, three big banks released such surveys, and the results were pretty much the same: The owners are reporting that the national and regional economies are mending, but at a pace that resembles a snail’s.

Wells Fargo Bank’s survey seems to be the most optimistic. The quarterly report released last week showed its small business index, conducted by Gallup, hit the highest level in the past six years when the global financial crisis erupted. Still, while Wells Fargo’s small business index has jumped, it remains well below the high point reached before the recession took hold in 2006, the bank said.

Naturally, all the lenders are asking customers about their credit needs and what they expect to use the money for in the future. And naturally, these surveys show more businesses are feeling more confident about obtaining a loan. The Wells Fargo survey found businesses that expect difficulty in getting a loan at the lowest level since third quarter 2008.

- Advertisement -

What a change four or five years makes.

An annual survey done by California Bank & Trust found nearly 35 percent expect to borrow money this year, with 49 percent of those saying bank loans were their primary source of funding. What a surprise.

When polled about the state of the economy, surveys by CB&T and U.S. Bank found different results. CB&T’s survey found customers in the Los Angeles area were more optimistic than those in the Bay Area or San Diego. The U.S. Bank survey, also conducted annually, found customers in SoCal to be less optimistic than those in the northern part of the state. The trend was consistently the same over the past five years, U.S. Bank said.

The proof on the geographic disparity in small business optimism is reflected in the surveys’ findings regarding clients’ investment and hiring plans. U.S. Bank’s survey found that while a large majority of customers nationally and in California anticipate maintaining current staffing levels, owners in SoCal and most of the nation are still hesitant to make significant investments, such as hiring additional people. In fact, only 26 percent in Southern California expect to make a big capital expenditure in the next 12 months, while 37 percent in Northern California said they expect to do so.

This isn’t a big revelation. Over the past five years, the economy has been rebounding strongly in NoCal, while it just slogs along in SoCal.

Again, all of the surveys point to what is obvious to even the most casual observers: We’re doing better this year than in the past, but we still have a ways to go.

They also reveal another truism: Each of the banks is looking for new clients and will do everything possible to get your business.

• • •

Silvergate profits drop in first: Silvergate Bank, based in the University Towne Center area, racked up nearly $1 million in net profits for the first quarter, which was off 32 percent from its net income for the like quarter of last year.

CEO Alan Lane said the disparity stems from a contracting net interest margin and fewer residential loans. The net interest margin, essentially the profit it earns between what it charges on loans and what it pays on deposits, shrank to 3.12 percent in the first quarter from 3.41 percent in the like quarter of last year.

Total assets jumped 14 percent over the year to $724.8 million. That ranks the bank as the fourth largest among local commercial banks.

Total deposits decreased 9 percent to $444 million, mainly due to Silvergate selling its Lancaster branch to Glendale-based Americas United Bank.

Total risk-based capital at March 31 was 17.14 percent, well above the 10 percent standard to be considered well-capitalized.

The bank is growing its commercial real estate loans. In the first quarter, it held $195 million in the portfolio of that variety, up from $180 million at the end of December.

Lane said the bank also expects to expand its small business lending activity, especially since the hiring of longtime commercial banker Dino D’Auria to take over the division. D’Auria previously worked at Opus Bank, and before that at Pacific Western Bank and San Diego National Bank.

• • •

Wells Fargo sets $100 billion goal: Wells Fargo (NYSE: WFC), already the nation’s biggest lender of Small Business Administration-backed loans, set a goal to make $100 billion in new loans to this group by 2018. The San Francisco-based megabank introduced a broad initiative called Wells Fargo Works for Small Business that provides resources, guidance and services. The bank launched a website to provide these services called WellsFargoWorks.com.

• • •

Longtime banker passes: Rob Hildt, who helped found two regional banks, 1st Pacific Bank of California in San Diego and MetroPacific Bank in Irvine, died in March. He was 71.

• • •

Small Change: Citizens Business Bank, based in Ontario and with $6.9 billion in assets and 37 branches including one in Carmel Valley, said it was scheduled to close its acquisition of American Security Bank of Newport Beach on May 15. … BluFi Lending, a Carlsbad-based mortgage bank with five offices, agreed to be acquired by Freedom Mortgage Corp. of New Jersey for an undisclosed sum. Freedom will retain the offices of the 5-year-old lender. … Opus Bank, based in Irvine and with five branches in San Diego, said its initial public offering resulted in $153.8 million in common stock sold, with $76.3 million of that listed as net proceeds to the bank.

Send news about locally based financial institutions to Mike Allen via email at mallen@sdbj.com. He can be reached at 858-277-6359.


Featured Articles

Investment Fund Targets Student Housing

Maneuvering in a High Interest Environment

Trovata’s Tech Taps OpenAI


Related Articles