Rob McMillan has become one of banking's experts on the wine business, but he might easily have spent his whole career thinking about corpses instead.
McMillan — an executive vice president at Silicon Valley Bank who founded its division that caters to wineries and others in the grape biz — is set to release Tuesday his popular annual report on the state of the wine industry.
But in the early 1990s, when the bank asked him to suggest niche segments to enter, wine was far from his mind. He crunched the numbers and found the perfect industry for the bank to target: mortuaries.
"'Go find something more fun,'" his boss told him.
So McMillan kept looking. At the time, the wine industry was languishing. Major lenders were trying to reduce their exposure to wine, and the business was seen as extremely risky. But McMillan saw an opening.
"The fine-wine industry was showing growth even though the entire industry, measured by top-line volume, was contracting," McMillan says.
The major banks' rush to abandon the industry left room for specialty lenders who knew the market. In 1994, when McMillan founded the unit, he was far from a wine expert — more of a "pink wine and 7-Up guy," he says — but he hired analysts who knew the wine-growing regions of California, Washington and Oregon.
Now Silicon Valley Bank, a $20 billion-asset subsidiary of SVB Financial (SIVB) is the second-largest wine lender in the country, according to the North Bay Business Journal. The wine unit, based in St. Helena, Calif., has a loan portfolio of around $475 million, according to its 2011 annual report.
The 28-person group includes a sommelier, a concierge and a director of wine programs, whom the bank hired to help connect winemakers with its tech and venture-capital clients.
Silicon Valley Bank used to have a winery mergers-and-acquisitions unit, too, but McMillan said there simply weren't enough sellers to match with buyers.
"I can't tell you how many calls I got from people saying, 'I work on Wall Street and I'm re-evaluating my career choices. What can you tell me about wineries?'" McMillan said.
No stranger to dual vocations himself, McMillan serves two masters, banking and rock 'n' roll. He's the drummer in the Exploding Warrants, a classic-rock band that also features Silicon Valley Bank's assistant chief credit officer, Mark Cadieux, on guitar. They've gigged at the Fillmore in San Francisco and the annual South by Southwest music festival in Austin, Texas.
"Banks have a tendency to attract buttoned-down, structured people, and I'm neither of the above," McMillan said. "What you discover in life is that banking is a team sport, and Silicon Valley Bank has given me a chance to use my creative skills to help the bank."