Academic journal article ABA Banking Journal

Small Business Is Big for California SBA Specialist

Academic journal article ABA Banking Journal

Small Business Is Big for California SBA Specialist

Article excerpt

There's nothing "small" about small business lending at Temecula Valley Bancorp.

The bank, just over $1 billion in assets now, finished 2005 as the 16th-largest Small Business Administration lender in the nation and it has been the largest independent bank SBA 7(a) lender for four years in a row.

Temecula, Calif., a small city north of San Diego, is a vibrant place, and its healthy economy drew the attention of Stephen H. Wacknitz, president, CEO, and chairman, about a decade ago.

"Temecula was the place to be," Wacknitz recalls, when he began talking to local investors and leaders about establishing a new bank in town in the mid-1990s.

But the bank's phenomenal SBA lending record draws on much more than a strong local economy. Over the last five years its SBA operation produced more than $1 billion in SBA loans to small businesses in 33 states--$300 million in 2005 alone. These loans came from a network of SBA loan production offices the bank has gradually established in 15 states. The bank expects to produce over $400 million in SBA loans this year.

This strong commitment to SBA loans helped produce stellar results for the bank in 2005. The company had a yearend ROAE of 27.6%, placing it ninth in the ABA Banking Journal "Top Performers" rankings for non-S corp. institutions between $100 million and $3 billion in assets(July 2006, p. 30).

Building a network

Of course, this aggressive operation didn't materialize overnight. Wacknitz came to town as a veteran of both California and Indiana banking, and had extensive SBA experience. He wanted to build his fast-growing bank with SBA lending, but this had to be done carefully.

"The key was having the right person to get our operation going," says Wacknitz. After the bank had been open for several years, Wacknitz recruited William H. McGaughey as chief operating officer. Over time, McGaughey, who had headed SBA lending at another California, concentrated on SBA operations, and is now senior executive vice president and director of finance and SBA lending for the bank. Today, more than a third of the bank's approximately 280 employees work in the SBA operation on origination, underwriting, processing, and servicing. The loan production offices are generally staffed by a producer and a sales assistant. Producers receive a base salary plus commission.

Much of the business comes down to people. Customer service quality is a big part of the equation, according to Wacknitz, and hiring and training people who can navigate the often complex SBA process makes that service better for borrowers. The bank is an SBA nationwide Preferred Lender, which further expedites its service.

Because of this "people factor," the producers in the bank's SBA sales office network are permitted to go out of their territory when pursuing business. In this way, they can continue to do business with a customer who is expanding beyond their original market. …

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