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Friday, Sep 22, 2023

Wells Pushes Into Minority Business Community

Wells Fargo Bank is trying to become “the bank of choice” for black business owners.

This month, the San Francisco-based bank said it passed the midpoint on a promised goal of lending $1 billion to black enterprises.

The bank selected Black History Month to provide an update on its program, launched in 1998 with a 12-year period to achieve the $1 billion goal.

“This program is hitting its stride and I am confident we will meet or exceed our lending goal,” said Brenda Ross-Dulan, Wells Fargo’s regional president for the greater Los Angeles area. In San Diego, it has 82 offices and more than $5 billion in local deposits.

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The program isn’t just about generating transactions and fees, Ross-Dulan said.

It also entails making connections with community groups to provide business counseling and education seminars to help minority business owners, and sponsoring research studies that enables the bank to better understand this market, she said.

It’s a market that’s growing faster than the national average for all small businesses. According to data from the U.S. Census Bureau, there were about 800,000 black-owned business enterprises nationally, with total revenues of about $71 billion as of 1997. From 1992 to 1997, that segment grew 25.7 percent, compared with about 8 percent for all small businesses, the report said.

The largest group of borrowers in the black loan program , 35 percent , are service businesses such as consulting companies and staffing firms. Other industries represented in the program are in transportation and communications, retail, and construction.

For the most part, the type of loans made to black-owned businesses, like those made to most small businesses, are relatively small , less than $100,000.

“The average is between $24,000 and $26,000 and are mostly for lines of credit,” Ross-Dulan said.

The lines generally carry much lower interest rates than credit cards, or those offered by commercial finance companies and require minimum payment of interest, not of both principal and interest, she said.

Wells’ outreach to the black business community follows a similar outreach lending program it did with women-owned businesses launched in the mid-1990s.

Ross-Dulan compares the program to receiving a personal invitation to a party.

“What we’re saying is that we have these programs that are available to everyone, and that are also available to you (the black business owner),” she said. “If you got an invitation to the party personally addressed to you, you would be more likely to accept it.”

Some banks market their lending to minority businesses, but not specifically to blacks.

In other news, Wells Fargo also introduced a free online finance planning tool last week it calls My Spending Report.

The report combines all the financial transactions that customers do through their Wells accounts, including check card spending, credit card purchases, checking, and bill paying, compiling all the data in one place, and organizing it by familiar categories such as gas/auto; groceries; and ATM withdrawals.

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ITLA Profits Climb:

ITLA Capital Corp., parent firm of Imperial Capital Bank and a subsidiary real estate investment trust, reported net income of $30.6 million for 2004 compared with $29.6 million in net income for the previous year.

The bank did $1.02 billion in loan production last year, compared with nearly $795 million for the previous year. The largest lending activity was in commercial loans, which accounted for nearly $635 million of the total.

Chief Executive Officer George Haligowski said the new loan generation was not only a record, but the first time the number has passed $1 billion.

Total assets at year-end were $2.3 billion, up about $500 million from the end of 2003.

Nonperforming assets were $14.7 million, or 0.63 percent of total assets, compared with $15.6 million or 0.86 percent of total assets at the end of 2003.

For 2004, the bank charged off $2.6 million in bad loans, compared with $7.4 million in the prior year.

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Regents Profits, Assets Rise:

Regents Bank, which opened in September 2001, saw its net income for 2004 reach $1.5 million, compared with $171,000 in 2003. The bank said it cashed in $574,000 in income tax benefits it secured when it racked up net losses in its first few years.

Total assets at the La Jolla-based bank grew 24 percent to $168.6 million, while loans rose 35 percent to $110 million.

Even though the bank has no loans on non-accrual or loan losses, it boosted its loan loss reserves to $1.35 million, or 1.23 percent of its outstanding loans.

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Landmark Still In Loss Mode:

Landmark National Bank, which is based in Solana Beach and has two offices, reported a net loss of $1.54 million for 2004, compared with a net loss of $2 million in 2003. The bank’s loan portfolio grew 182 percent to $52 million during the year, while total assets rose 75 percent to $68.2 million.

The bank increased its reserves to $572,284, or 1.1 percent of the total portfolio, and reported no problem loans.

Chief Executive Officer Ron Carlson said he expects to break through to profitability by the second quarter.

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Commercial Mortgages Still Surging:

Rising mortgage rates didn’t deter any activity in commercial and apartment lending last year, according to a recent report by the Mortgage Bankers Association.

For the full year, the total dollar value on loans for offices, retail, industrial property, and apartments grew to $136 billion, up 16 percent from the previous year.

During the fourth quarter, the amount of loans in the category hit $42.7 billion, which was more than $ 7 billion above the amount in the 2004 third quarter, and the highest ever since the MBA started doing its survey.

The largest percentage increase in commercial lending was for office properties, where $33.2 billion in new loan originations were completed last year, nearly 28 percent above that originated in 2003.

“With commercial property values strong, interest rates low, the economy growing, and real estate markets starting to improve, 2005 looks to produce more of the same,” said Douglas Duncan, the association’s chief economist.

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Coalition For Fair Banking Forms:

About a dozen San Diego community groups have joined forces to address what they see as a lack of accessible banking services in this town’s inner-city neighborhoods.

“Mainstream banks evidently feel it’s not profitable to have branches in the inner city,” according to a statement announcing the formation of the Coalition for Fair Banking. “If they have them, most won’t cash your checks unless you have an account. And for many people, the opening balance requirement and the monthly fees are prohibitive.”

The group was especially critical of a proliferation of private check cashing services that charge excessive fees, and a stringent reliance on banning bank services to customers who have bounced a check in the last seven years.

The coalition is holding its first public forum on the issue at a luncheon scheduled for 12:15 p.m. Tuesday, Feb. 22, at the Courtyard by Marriott in Old Town, 2435 Jefferson St. For information, call the League of Women Voters of San Diego.

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Small Change:

Silvergate Capital Corp., parent of San Diego-based Silvergate Bank, completed a capital offering of $6 million in trust preferred securities Wells Fargo named Lauren Tobiassen as community banking president for the Central San Diego market, which is responsible for 23 branches. San Diego County Credit Union, which now bills itself as the largest financial institution in the county with assets of $2.7 billion, returns as the sponsor of the 2005 MS Walk in April. IronStone Bank, a subsidiary of North Carolina-based First Citizens BancShares Inc. with two branches in San Diego, said IronStone’s Western division reached $1.5 billion in assets last year. 1st Pacific Bank of California announced the move of its headquarters to 4275 Executive Square in University Towne Centre. San Diego Metropolitan Credit Union re-elected Michael Ahlering as chairman of its board of directors.

Send any local finance or banking news to Mike Allen at mallen@sdbj.com. He can be reached at (858) 277-6359.


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