Small-business lending declined sharply after the financial crisis, but things are finally starting to get back to normal.
Nearly $1.6 billion in loans backed by the U.S. Small Business Administration were given to local companies during the recently ended fiscal year, a record high for the L.A. district. The total was up 49 percent from last year, according to data recently released by the agency.
The number of loans still trails prerecession highs, but the 2,477 SBA loans represented a 13 percent increase from 2010.
“SBA lending is on the rise,” said Bob Coleman, who runs the Coleman Report, an independent publication examining SBA lending.
He pointed to several factors for the improvement, including temporary federal programs last year that raised the level of government backing and eliminated borrower fees. What’s more, many cautious banks prefer to “mitigate their risk” by lending government-guaranteed SBA funds.
JPMorgan Chase & Co. was the top lender to local small businesses during the year, handing out 290 loans for a total of $45 million. The bank surpassed the previous leader, Wells Fargo & Co., which came in at No. 2 with 166 loans for $69 million.
Center Bank, a small Koreatown institution owned by Center Financial Corp., was the top lender by dollar amount. A perpetually active SBA lender, the bank originated 143 loans for more than $140 million.
A number of local banks also made strides with their SBA lending.
Downtown L.A.’s City National Bank, last year’s No. 26 lender, was the 16th largest SBA lender this year with 46 loans totaling $17 million.
“We’ve seen real growth in small business,” said Russell Goldsmith, City National’s chief executive.
Growth Spurt
After wrapping up its public legal battle with a rival firm, DoubleLine Capital LP announced last week a sharp rise in its assets under management.
The downtown L.A. fixed-income investment firm, which was started in late 2009 with less than $2 billion, saw mutual fund inflows of $1.6 billion during October, boosting its total assets to $19 billion.
The growth came after the firm’s founder, noted bond fund manager Jeffrey Gundlach, wrapped up his trial on claims that he stole trade secrets from his former employer, L.A. asset manager TCW Group Inc. In September, a jury found that Gundlach breached his fiduciary duty and misappropriated trade secrets, but also that TCW owed Gundlach and other former employees $67 million in back pay.
The two sides are wrangling over the royalties owed to TCW for the trade secrets issue. The next hearing is scheduled for Nov. 21.
Gundlach has said previously that the battle with TCW has scared away potential clients, so those fears may have eased.
Enforcement Actions
The Federal Deposit Insurance Corp. is cracking down on the local financial industry.
Americas United Bank, a small institution in Glendale, recently entered into a consent order with the agency requiring it to retain qualified management, strengthen capital levels and reduce troubled assets. The order also called on the board to “increase its participation in the affairs of the bank,” including holding monthly meetings. The bank did not return calls seeking comment.
Separately, the FDIC announced that it has levied civil money penalties against two former directors of First Bank of Beverly Hills, a Calabasas institution that failed in 2009.
According to the order, Larry Faigin, a former director and the former chief executive, and John Lannan, a former director, “recklessly engaged in unsafe or unsound practices,” including the approval of risky loans, which caused the bank to incur heavy losses. The FDIC assessed penalties of $85,000 against Faigin and $75,000 against Lannan.
The pair could not be reached for comment.
C-Suite News
Investment banking firm Jefferies Group Inc. announced that David Luse was hired as managing director of the firm’s financial sponsors investment banking group. He will be based in the L.A. office. … Ares Management LLC, an asset management firm with offices in Century City, has hired Suzanne Murphy as global head of marketing and investor relations. … First Republic Bank said that it has hired Charles Heaphy as senior managing director and head of its motion picture and TV finance unit, based in Century City. … Scott Anderson, a senior vice president with City National, was appointed to the professional development council of the American Bankers Association trade group.
Staff reporter Richard Clough can be reached at [email protected] or at (323) 549-5225, ext. 251.
