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Sunday, May 28, 2023

Lending Fund Allows Bank to Help Small Businesses and Itself

Seacoast Commerce Bank joined a group of local lenders who are benefiting from the Treasury Depaartment’s Small Business Lending Fund, a program to spur lending by banks with less than $10 billion in assets.

Earlier this month, SCB, based in Chula Vista and with about $130 million in assets, obtained a preferred stock investment from Treasury of $4 million. The bank said it used $1.89 million of the funds to pay off money Treasury invested in the bank in 2009 through the Troubled Asset Relief Program.

On the earlier TARP money, SCB paid annual dividends to Treasury of 5 percent or nearly $100,000. Under the new arrangement, the bank qualified for a 1 percent interest on the $4 million or about $40,000.

For CEO Rick Sanborn, it was an obvious no-brainer.

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“If you’re a bank that obtained TARP, this was something that just about everyone did,” he said.

Unlike a bevy of banks, both large and small, that are sitting on mounds of cash and not lending, SCB is doing its part to try extending credit to worthy borrowers and with the $2 million capital infusion it can make even more loans, Sanborn said.

For the 11 months of the federal government’s 2011 fiscal year, SCB reported making 169 loans through its Small Business Administration loan program for a gross amount of $128 million. That ranked the bank No. 16 among all lenders, Sanborn said. The bank sells off the loans to other investors.

Of the types of loans SCB makes, the majority are those through the SBA 7(a) program and typically to manufacturers, wholesalers, distributors and professionals, Sanborn said. “There’s no particular concentration; we lend to a diverse group of businesses,” he said.

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California Community not on the selling blocks: Chief Executive Larry Hartwig of California Community Bank said there’s no truth to rumors the bank was negotiating with a buyer recently.

He chalked up the rumor to the fact that he was visited by some investment bankers, who are “always sniffing around.” Of course, he talks to such folks and listens to what they say about potential deals, which is part of the job.

He also gets approached to buy banks as well, Hartwig said.

“But today, there’s nothing going around,” he said. “And we don’t have a ‘for sale’ shingle out.”

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FirstPac Trust in buying mode: FirstPac Trust Bancorp, the Chula Vista based parent to Pacific Trust Bank, is executing on what it said it would do once it raised more capital: get bigger.

At the end of last month, the savings bank said it agreed to acquire Beach Business Bank in Manhattan Beach with $304 million in assets for about $37.4 million in cash and stock. In June, FirstPac announced the purchase of Gateway Bancorp, with $187 million in assets. The latter lender, based in Cerritos, operates a mortgage lending division that has 22 offices in California, Arizona and Oregon.

Once the bank completes these deals, FirstPac said it will have about $1.3 billion in total assets, with 18 branches in San Diego, Orange, Los Angeles, and Riverside counties, a pretty decent footprint.

For a company that raised $60 million in new capital last year and repaid $19.3 million of TARP debt, FirstPac hasn’t rested on its laurels. It raised another $27 million in new capital earlier this year and then got $32 million last month from the Small Business Lending Fund.

Put that all together and FirstPac’s current tangible capital ratio is 18.2 percent. To be considered a well-capitalized bank, 5 percent in that measure will do. With three times that amount, it’s not hard to see FirstPac realizing its stated goal of growing to about $5 billion in assets over the next five years.

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Small Change: Wells Fargo & Co. said it will increase its commitment to credit counseling nonprofits by $5.4 million to a total of $12.4 million this year, up 35 percent from its allocation in 2010. In April, the U.S. Department of Housing and Urban Development discontinued $88 million in grants to housing counselors … Trading Financial Credit, which lends money based on the wholesale value of vehicles, opened a new office in Mission Valley. The office is managed by Michael Juarez … Leap Financial, another car financing business with a different model — providing car leasing to customers who cannot obtain traditional loans—added five new executives to its team, all of whom have considerable experience in auto financing industry … Union Bank was a gold sponsor the National Association of Women Business Owners convention held Aug. 31-Sept. 1 … Brett D’Arcy, former chief investment officer for CBIZ Wealth Management, set up his own firm in San Diego that serves individuals, foundations and institutions.

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


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