In the past decade, Southwest California has gone from a quiet bedroom community to a self-reliant region with a thriving economy. Nowhere is this transformation more evident than in the financial services sector with the arrival of experienced bankers and accountants.
"The financial services community has taken off since our opening eight and a half years ago, with Mission Oaks National Bank right behind us," said Steve Wacknitz, president and chief executive of Temecula Valley Bank. "A number of other banks also have set up branches here."
In that time, Temecula Valley Bank and Mission Oaks National Bank, which opened in November 2000, have grown along with the region, which has attracted dozens of new businesses looking for business opportunities, affordable land and housing, innovative financing, special business zones and easy access to other key Southern California markets.
As the region grew, so did the banks. Temecula Valley Bank in 2004 was among the top 10 best run banks in the country as measured by return on equity. Today, Temecula Valley bank is a $750 million institution with nine branches and small business lending offices in 16 states.
Fueling the growth in Southwest California was an influx of new residents from neighboring counties looking for affordable housing and a family-oriented lifestyle. A residential construction boom caught the eye of retail developers who found a spot in Southwest California for some of the nation's leading store operators. All this activity spurred commercial and industrial development that has attracted new business to the area.
Gary Votapka, president and chief executive of Mission Oaks National bank, believes that businesses relocated to the area for many of the same reasons as homeowners. With less expensive land and building prices lower than neighboring Los Angeles, Orange and San Diego Counties, Southwest California has become the place for business owners to buy their own building or expand into a larger one.
With many of the major lenders fleeing the area during the recession of the 1990s, bankers such as Votapka and Wacknitz were in the right place at the right time as the economy turned around. They brought their own style of personalized community banking to an area that has seen larger banks come and go as mergers and consolidations dramatically culled the ranks of the financial services industry.
"At the time, many of the big banks were not making loans," said Votapka, as lending policies tightened up and newly merged banks tried to absorb their acquisitions. That left the door open for the creation of local institutions governed by local boards that made lending decisions locally in days, not weeks or months as was the case with larger out-of-town banks.
"We are a full-service commercial bank," Votapka said. "Even though we are a community bank, our primary focus is business."
He said Mission Oaks, with assets of more than $130 million and three branches, can handle just about any customer who walks through its doors.
The little it cannot do in-house, is referred to others.
"We do not provide international letters of credit, for example," Votapka said. "But we can handle that transaction through a correspondent bank."
Both Mission Oaks and Temecula Valley Bank are major Small Business Administration (SBA) lenders. In fact, Temecula Valley is the largest community bank SBA lender in the United States, according to Wacknitz.
If a business can benefit from non-traditional financing, the Southwest California Economic Alliance is there to help.
Such was the case with CompuTrus Inc., a Riverside-based building services firm that recently relocated to Lake Elsinore.
It didn't hurt either that land and building costs in Southwest California were less than in other regions and, as the company learned from economic development officials, it was eligible for industrial development bond financing with attractive rates and flexible terms.
"Many companies have discovered the advantage of doing business in Southwest California," said Gregory Lee, manager of business development for the Southwest California Economic Alliance, a regional business and job attraction group that includes the cities of Lake Elsinore, Murrieta and Temecula and Riverside County. "CompuTrus is a great example of the quality of companies that are sitting up and taking note of our region."
CompuTrus, which makes the metal connector plates that hold trusses together and provides critical engineering and software services to builders, took advantage of industrial development bonds. IDBs, as they are known, are a cost-effective way for emerging companies with annual sales of $5 million to $25 million to borrow money for buildings and equipment at 1 to 2 percent below prevailing rates.
"It's a great way to keep companies in California," said Sam Balisy, an attorney with Kutak Rock LLP, a Pasadena law firm that specializes in IDBs. "It's a pretty darn good product." Borrowers benefit because they get the tax exempt rates that cities, counties and states enjoy when they borrow money. That's because Riverside County sells the bonds, and the proceeds go to the borrower. The bonds are secured with a letter of credit issued by a bank for the benefit of the borrower.