Published December 2003

Banking & Lending Briefs

Frontier to open branch
in downtown Seattle
Frontier Bank plans to open a new branch in downtown Seattle before the end of the year.

The Everett-based bank is moving to capitalize on opportunities created by the merger of Wells Fargo and Pacific Northwest Bank, said John Dickson, Frontier’s chief executive.

Frontier announced in November that it had received regulatory approval to open the branch, which will be in the IBM building at 1200 Fifth Ave.

It will be Frontier’s 39th branch, and its first foray into downtown Seattle, although Frontier has had a branch in north Seattle’s Lake City area.

The new branch will be staffed by seven bankers who were with Pacific Northwest Bank before the merger and who decided to move to another community bank, Dickson said. Those bankers already have relationships with potential clients, and Frontier hopes it will be “an opportunity for us to grow our loans and deposits substantially,” he said.

The group includes James Liming, who was a senior vice president and team leader for Pacific Northwest Bank. He will be a senior vice president and metro division manager for Frontier.

The bank’s branch network now extends from Bellingham to Pierce County. Establishing a bigger presence in Seattle “would fill in some of our empty spots down the I-5 corridor,” Dickson said.

Pacific Northwest Bank began as Oak Harbor-based InterWest Bank. InterWest bought Seattle-based Pacific Northwest Bank in 1998 and took its name. Following a reorganization in 2000, the bank moved its headquarters to Seattle.

SBA moves to risk-based
lender oversight
The U.S. Small Business Administration is implementing a risk-based approach to overseeing individual lenders, the agency announced in November.

Last spring, the SBA hired Dun &Bradstreet and Fair Isaac to provide loan and lender monitoring service for the agency. The system was recently delivered by Dun & Bradstreet to the SBA, and provides the agency with the ability to asses the performance of individual lenders and evaluate the overall performance of the SBA’s 7(a) and 504 loan portfolios, the SBA said.

At the heart of the system is the Dun & Bradstreet/Fair Isaac Small Business Predictive Score, in which the entire SBA loan portfolio is credit scored for portfolio management purposes — not for credit decisions — on a quarterly basis, the SBA said.

Once scored, the SBA analyzes the portfolio to quantify loan and lender performance and to track trends, the agency said. Benefits of the new tool include risk ranking of all SBA lenders, effective off-site monitoring of credit and performance trends of SBA lenders, frequency and scope of lender reviews tied to risk profile of lenders, and lender and portfolio benchmarking and peer comparisons.

The SBA Office of Lender Oversight is implementing the loan and lender monitoring system agencywide and plans to issue further guidance for lenders on the impact of this risk-based oversight in the near future, the SBA said.

First Heritage ranks 4th
among Puget Sound’s SBA lenders
Around the Puget Sound region, Snohomish-based First Heritage Bank ranked fourth in the number of SBA loans issued by a lending institution for fiscal year 2003, according to numbers released by the U.S. Small Business Administration.

The Snohomish-based bank moved up from eighth-place in 2002 and increased the number of SBA loans issued by 250 percent, to 77 loans, the bank said, adding that it plans to surpass its goal of 90 SBA loans for 2003.

In a pool of 75 regional and national lenders, First Heritage was joined by another Snohomish County bank, Lynnwood-based CityBank (ranked eighth), in the top 10. The top three SBA lenders were Bank of America, U.S. Bank and Wells Fargo Bank.

Loans help cover costs
of reservists called to active duty
Small businesses with essential employees called to active duty can still apply for Military Reservist Economic Injury Disaster Loans from the U.S. Small Business Administration.

For the past two years, the MREIDL program has provided loans to eligible small businesses to cover operating costs that cannot be met due to the loss of a key employee called to active duty in the reserves or National Guard, according to the SBA.

“Many small businesses have had to cope with the loss of know-how, and have been hurt financially by the absence of a key employee during the recent call ups,” SBA Administrator Hector V. Barreto said in a prepared statement. “This loan program has helped many businesses survive.”

Small businesses may apply for MREIDLs of up to $1.5 million if they have been financially impacted by the loss of an essential employee. The working capital loans can be used to pay necessary operating expenses that would have otherwise been covered, the SBA said. The loans cannot be used to refinance debt or expand the business.

The current interest rate is 3.1 percent, with a maximum term of 30 years, with the SBA determining the amount of economic injury, the term of each loan and the payment amount based on the borrower’s financial circumstances.

The MREIDL filing period ends 90 days after the date the business owner or key employee is discharged from active duty.

To download an application, visit the Web site at www.sba.gov/disaster. Businesses also can contact the SBA disaster area offices to obtain an application. In Snohomish County, call 1-800-488-5323.

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