Press Release


Community bankers find unlikely ally: Wells Fargo's CEO

Sf Business Times

July 19, 2016 - Rising rents are taking a toll on San Francisco's small businesses and nonprofits trying to remain in the city.  

Conversations with small business owners and nonprofit leaders at Bay Area business luncheons or over coffee these days often include talk of how they've moved to Oakland and elsewhere as San Francisco rents doubled — or worse.  

Against that backdrop, a loan from one of San Francisco's smallest banks underscores the important role community banks still play in supporting small businesses and nonprofits. The financing also echoes the importance of small banks to America's success, which Wells Fargo (NYSE: WFC) Chairman and CEO John Stumpf discussed in a recent speech to the Bay Area's business community.

This week, San Francisco-based Trans Pacific National Bank, with just $125 million in assets, said it was able to help one nonprofit stay in San Francisco.

The community bank made a $1.2 million loan to San Francisco-based Independent Television Services Inc., which many public-television viewers know for its weekly series, "Independent Lens."

Trans Pacific's loan financed tenant improvements and related costs for ITVS to move into its new offices and studios leased at 1435 Folsom St.

The circumstances surrounding the nonprofit's move have a familiar ring: Its rent was more than doubling after investors purchased their former building and courted tech tenants.

 “Frankly, nonprofit organizations are being priced out of the market,” said Judy Tam, chief financial officer at ITVS. “For many, funding sources are often limited. Capital campaigns take a long time, and the need for a new ITVS home was rapidly approaching."

 Trans Pacific President and CEO Bob Lussier said the nonprofit's long-standing deposit relationship with the bank provided the lender with the confidence it needed to extend a 10-year fixed rate, unsecured loan to finance the buildout of ITVS' new space.

 He credits the small bank's ability and agility to make the loan to having decision-makers at the table rather than a loan officer who has to send the loan application up the ranks. ( In a pioneering move last year, Trans Pacific provided financing, along with investors through crowd-funding, so that the Cadillac Bar & Grill could open in the Twitter building.) .

 Tam at ITVS was pleased to find a banker willing to finance the buildout of the nonprofit's new location.

“I have always been a proponent of working with a local bank which was interested in the community,” Tam said. “While I knew that there were larger banks to talk with, I didn’t want to be shuffled off to a branch manager who ultimately couldn’t make decisions.

"At the same time, I understood that our need might be greater than the normal loan limits of a community bank,” Tam said.

The transaction underscores the important role that small banks still play in financing local businesses and nonprofits, even as many are merged out of existence. Long-running banking consolidation is expected to continue amid the rising costs of regulatory compliance and tight profit margins on loans in today's low-rate environment.

But Lussier and his small-bank counterparts got some vocal support from the head of one of nation's biggest banks.

 Wells Fargo's CEO, speaking at a Bay Area Council event in May, said he'd prefer to see an easing of the regulatory burden on small banks so these institutions could pour more money into technology, cybersecurity and small business financing, noting the importance of the community bank in the small Minnesota town in which he was raised.

 "If that bank left, the town would dry up and blow away," Stumpf said. "The secret about the success of America is we need financial services participants of all sizes and types."

 The increased regulation following the 2008 financial crisis may have had some unintended consequences affecting banks of all sizes, including Wells Fargo.

"Some of this regulation, not all but some, makes it difficult for us to lend money or serve customers who are on the margin, unbanked or 'emerging.' That's not helpful," Stumpf told his audience.

"No one that I know, who has been successful, banks with the corner liquor store or a mattress," Stumpf said.

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