A small California bank went nearly 1,000 miles to get away from the crowded Southern California small-business loan market.
Valley Bank, a $68 million-asset institution in Riverside County, opened its first out-of-state Small Business Administration lending office April 22 in Portland, Ore.
Valley chief executive Doug Mills said his bank had grown weary of battling the more than 350 other SBA lenders in California, and is interested in taking advantage of Portland's bustling economy.
"We went around California looking for a site for a second SBA lending office and found that there are just too many lenders. It's just too saturated," Mr. Mills said. "So we looked across the border."
Out-of-state loan offices may provide a new source of opportunity for California's smaller SBA lenders, which are struggling to compete against hundreds of other institutions.
In addition to being crowded, Southern California's SBA market is still soft because of the recession of the early 1990s, according to Tim Weaver, senior vice president of TransWorld Bank, Sherman Oaks, Calif., a SBA preferred lender.
Portland is especially attractive because of a recent influx of high- tech money. It is Oregon's largest city, home to nearly 1.5 million including surrounding suburbs. Mr. Mills said he saw an opening when he noticed the top dozen banks in the Portland area were all statewide companies.
"There weren't any community banks headquartered in Portland serving the SBA market," Mr. Mills said. "We felt there was a need."
But Valley Bank won't have easy pickings up north, according to Frank E. Brawner, president of the Oregon Bankers Association.
"We have more small businesses per capita than any other state in the country, but we've also got a lot of competition for small-business loans," Mr. Brawner said. "Valley Bank is going to have to really work to get business."
Mr. Mills said Valley will emphasize its SBA program through direct mail.
"We try and do a quality piece and we do it often," he said. "We target our marketing pieces toward individuals such as commercial realtors, accountants, professionals, and people who have contacts within the community."
Valley, with seven Southern California offices, had considered several other western locales, including Seattle, Las Vegas, and Phoenix.
Mr. Mills said Valley officials knew when they initiated the SBA loan program in 1993 that they would need more than one office to generate the necessary volume.
"We've had three years to refine the process in Moreno Valley and it's worked well for us," Mr. Mills said. "We'll export this system to Portland and evaluate it in two or three years. We're going to see what two offices can do for us."
The bank's SBA volume exceeded $10 million in 1995, and officials said they expect the Portland office to bring in another $7 million worth of SBA loans.
