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SBA Lending Down Compared With Record Year

Small Business Administration lending in Orange County fell by 9% for six months through March to $132.8 million, according to this week’s Business Journal list of the 20 largest SBA lenders here.

The same group of lenders made about $146.4 million in SBA loans a year earlier.

Last year’s Business Journal list had a different mix of top lenders that combined for$220 million in lending, reflecting an 81% increase. There was an even larger increase a year prior, about 179%.

“[2010] was the biggest year ever in SBA lending due in part to some of the incentives passed as part of the American Jobs Act,” said Douglas Dare, economic development specialist at the Santa Ana district office of the U.S. Small Business Administration.

“That provided for a temporary waiver of the guaranty fee for borrowers and increased guaranties for lenders.”

Funding for the fee waivers and increased guarantees was exhausted by the end of 2010. That contributed to the total decline in 2011 lending among banks and financial services organizations on this week’s list.

Some increased SBA lending despite the shifts. Eight increased lending, while 12 saw declines.

Rankings also were shuffled around, as eight new firms debuted on the list.

CDC at No. 1

San Diego-based nonprofit CDC Small Business Financial Corp. led the group with a 26% increase in lending, for a total of $28.3 million.

“We haven’t felt a drop-off,” said Mark Hogan, senior loan officer at the company’s Anaheim office. “We’ve seen a continuation of last year.”

CDC Small Business Financial works with a third party on each SBA 504 loan it makes.

The Anaheim office has a staff of six, two of them loan officers.

“Once a banker has a borrower interested in [the 504 loan], the banker will contact us,” Hogan said. “We team up with the bank. In the end, the bank does the first trust deed, and we do the second. It’s a team effort. The more we can give the borrowers the appearance of unity, the less intimidated and more comfortable they can be.”

Wells Fargo Bank was the largest bank lender on the list, with about $16.8 million in small-business lending for the six months through March.

Wells Fargo had a surge in SBA lending for the same period last year at $32.4 million.

“The stimulus plan … spiked the numbers a lot,” said Steven Doss, regional SBA sales manager for Wells Fargo in Southern California. “Now it’s more in line with what it’s been.”

Big Two

The top two institutions accounted for 34% of the entire lending field. A gap of nearly $6 million separated it from subsequent entries.

Los Angeles-based BBCN Bancorp ranked third with $11 million in lending.

BBCN is the result of a combination of Center Bank and Nara Bank, two Los Angeles-based banks that were ranked on last year’s list of SBA lenders as 10th and 14th, respectively.

Center Bank had about $8.2 million in OC loans at the time, and Nara Bank had $6.3 million.

The current total of BBCN’s local SBA lending reflects a 24% drop, after accounting for the combination of the two institutions.

It’s sort of a “back to normalcy” for BBCN, too.

“The year-earlier time period … was an abnormal tick,” said Sylvester Kim, senior vice president and senior manager.

“We were eager to book the loans before [the incentives] expired. Now we’re back to normal lending numbers.”

No. 4 Seacoast Commerce Bank in Newport Beach jumped eight spots from last year despite a 10% decline in lending. It made eight loans totaling $7.1 million during the six months through March.

No. 18 Hana Small Business Lending Inc. had the biggest percentage drop, falling 62% to $3 million from nearly $8 million.

No. 8 Los Angeles-based Commonwealth Business Bank is among the newcomers.

Its Irvine branch had $5.6 million in SBA lending, more than double its total of $2 million for the same period a year earlier.

It served 10 loans over the six months through March, up from four during a similar period a year earlier.

Lending Drop

California Bank & Trust in Irvine also made the list this year at No. 17. It saw an 18% drop in lending to $3 million. Opus Bank in Irvine is No. 20 with $2.7 million.

It made about $2.7 million worth of loans, down 16% from a year-earlier total of $3.2 million. Opus is the largest bank based in OC with about $2.4 billion in assets.

Wells Fargo’s Doss said he sees some improvement in the companies that are coming to the bank for loans, as well as an increase in the availability of lenders.

“Competitively I think it’s great that more lenders have come back into the industry,” he said. “It’s a good time for the borrowers.

There are so many lenders in the market, offering competitive deals. It’s a good time for a borrower to apply for an SBA loan because of the aggressive nature of the industry right now.”


Download the 2012 OC’s LARGEST SBA LENDERS list (pdf)

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