A strong loan portfolio and several government-backed programs helped Irvine-based Pacific Enterprise Bank increase its revenue to $9.1 million for the 12 months through June.
That’s more than double compared to two years ago—good enough for the No. 31 spot on the Business Journal’s list of fastest-growing private companies based here.
The commercial bank saw assets grow by about 50% over the year, to about $250 million, according to President Brian Halle.
Pacific Enterprise describes itself as having a “big-bank cash management system and community bank lending.”
The big difference from big banks, according to Halle, is customers “have access to decision makers.”
The state-chartered bank has a corporate office and a branch in Irvine, as well as a loan office in Los Angeles.
The bank employs 42 people, with most in sales and customer service. It outsources much of its information technology and human resources.
Growth has been the rule for Pacific Enterprise since it started in 2007. It now has about 500 clients, and it’s adding 10 to 15 new ones monthly, according to Halle.
Loans average about $500,000.
“Many banks have heavy concentration on real estate, but that’s not our bank,” Chief Executive Richard Ganulin said. “We are very well balanced between commercial loans.”
The bank provides various types of loans, ranging from standard construction loans to business loans through programs such as the California Capital Access Program.
Pacific Enterprise ranked No. 4 on the Business Journal’s list of Small Business Administration lenders here, which appeared in May, with $18.5 million in loans. It
has stayed busy, according to data from
the federal agency, with $23.1 million in loans as of August. That puts it second only to San Francisco-based Wells Fargo Bank among banks making SBA loans in Orange County.
“We use SBA lending and great government programs, and we finance buildings, buy buildings and provide working capital,” Halle said.
The bank provides 7(a) loans and 504 loans, which are small-business programs backed by the SBA.
“Originator”
The latest boost for the bank’s profitability, according to Ganulin, was being selected as a “pool originator” for the 504 loan program.
An originator puts together 504 loans and sells them to third-party investors. The government provides a guarantee on portions of the pool of loans.
According to the SBA, the pooling initiative is designed to free up money for lending to small businesses.
“The special designation allows us to refinance and pool 504 loans from other banks or generate them from inside,” Ganulin said. “Most of (the poolers) are, of course, the big banks.”
The pooling provides capital to small businesses, Halle added. “We’d like to be one of the top pools in the country.”
The bank’s clients range from new companies looking for startup capital to established businesses refinancing their buildings.
“Refinancing opens up a lot of revenue generation,” Ganulin said.
The bank’s primary clients are companies under $50 million in revenue.
“Those with $2 million to $3 million in revenue with about 10 employees” are a good fit, Halle said.
Pacific Enterprise counts more on commercial and industrial loans than real estate loans.
It has very few sour loans on its books.
“We have three nonperforming loans,” Halle said. “Basically no problems.”
Stimulus
Another boost for Pacific Enterprise’s growth was the stimulus package of 2009. Provisions in the economic stimulus bill included fee reductions in the SBA’s 7(a) and 504 loan programs, as well as increased government guarantee on the 7(a) loans up to 90%.
“That generated a lot of SBA buying,” Ganulin said.
Pacific Enterprise is also involved in the local community. It supports sporting activities and public schools in the area.
