Magazine article American Banker

Small Business Administration Honoree Sees Lucrative Niche for Banks in Neglected Sector

Magazine article American Banker

Small Business Administration Honoree Sees Lucrative Niche for Banks in Neglected Sector

Article excerpt

DENVER -- When Steve Butler was newly married, he took a job as a bank teller in Middlebury, Vt., because, he said, "we got through at three or four in the afternoon, and that would leave me extra time to find a real job."

Fifteen years later, he's still in the banking buisness, and this year he was named the National Small Business Financial Services Advocate of the Year by the Small business Administration. The long title means small businesses appreciatee the work he has done to help them financially, both in his own business and in changing state policies. It also meant that 30 phone call messages were waiting on his desk when he returned from the awards ceremony in Washington -- all from Businessmen who he had never met by who wanted his advice.

A couple of the phone calls resulted in loans for Market National Bank in Denver, of which he is president and chief executive officer.

Mr. Butler said that many banks have missed the boat in not concentrating on small business loans. Such loans tend to be risky and to be only about $100,000, he conceded. But they can result in a profitable niche that leads to a variety of other services for the borrowers. Approximately 95% of the loan portfolio at Market National is to small business, he said -- $14 million worth of loans spread among 250 borrowers, withthe average loan about $56,000. But th eloans also lead to company checking, payroll, and savings accounts, to loans and accounts for the owners, and often employee accounts as well.

"Small business had been neglected by big banks," he said. "Larger banks are not interested in a $50,000 loan, and small banks don't have the epxertise. So there's a definite niche there."

A number of sources have voiced concern that small businesses will be more strapped for loans than ever if deregulation results in fewer and bigger banks. However, Mr. Butler, who has testified before Congress on the issue, argued that, while small business may have a harder time acquiring loans when deregulated banks first begin growing, the profitability of the small-business market will insure a supply of money.

Mr. Butler, 38, has been president of Market National only since May 1, but he is not a newcomer to small-business banking. After living in Vermont, he worked for the Security Trust Co. in Rochester, N.Y., and then for Chemical Bank in New York City.

A transplanted Easterner

Despite being a Brooklyn native, he and his wife did not want to raise a family in New York City, so they came to Denver in 1978 to join part of the United Bank holding company. Because he was active in the Chamber of Commerce in Rochester, he wanted to work for the Chamber in Denver. He signed up for the opening it offered on its Small Business Council, and it proved a fateful decision.

when Seafirst recruited him two years later to open their first of three industrial banks in Denver, he suggested they concentrate on the small-business market. It was profitable, and it would distinguish Seafirst from other money center banks opening in the market, he had argued. The move was a radical departure for an industrial bank.

"Typically, industrial banks are to serve the consumer market," he explained. "Industrial banks started in the Midwest, in the old days when people like you and I couldn't go into a bank because we didn't have blue blood in our veins. The savings banks had limited lending powers, so the industrial banks were started for car loans, home-improvement loans, and so on."

Seafirst agreed to focus on small businesses, and it new Colorado operation turned a profit within nine months and acquired $15 million in assets by the end of the first year. Two more locations opened within two years.

"Then the Penn Square debacle blew up," Mr. Butler recaled. "Seafirst was sold, and the industrial banks were sold and closed."

After a stop at another Denver bank, he became senior vice president at Dominion National Bank in downtown Denver. …

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