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Sunday, 05 August 2012 22:05

Utah-based bank enters Mich. with eye on SBA lending

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WEST MICHIGAN — A Utah bank that specializes in U.S. Small Business Administration lending entered the Michigan market this summer, seeking to tap into the state's improving economy.

Celtic Bank hired Kenny Leonard, a seasoned SBA lender, as vice president of business development. Leonard works a territory that covers Michigan and surrounding states in the Midwest as Celtic Bank seeks to extend its reach eastward across the country.

"They saw Michigan has turned the corner — especially in manufacturing with its strong industrial base, and had a growing market that was underserved. It wanted to capitalize on that with an SBA lending program," said Leonard, who works primarily out of his Portage home.

Operating as an industrial bank under Utah law and without any branches, the privately owned Celtic Bank finances small business loans backed by the SBA and the U.S. Department of Agriculture. The bank ranked 11th on the list of the 100 most active lenders nationally in the SBA's 7(a) loan program through the first six months of the federal government's 2012 fiscal year, writing more than 50 loans for $59.7 million.

A majority of clients come to Celtic Bank via referrals from commercial mortgage brokers, commercial real estate brokers and financial advisers, Leonard said. He's also looking to forge connections with small community banks in Michigan that want to become involved in SBA lending but lack the in-house expertise.

Because of the bank's structure and focus, small community banks can refer a client for a SBA loan without having to worry about Celtic trying to lure them away and pick up the rest of their business banking.

"We help them find a solution for their client," Leonard said. "We help them do the SBA loan and they keep the relationship."

Celtic Bank ventured into the Michigan market as the SBA saw mixed results in its lending programs.

Through the third quarter of the federal government's 2012 fiscal year, lending in Michigan under the SBA's primary 7(a) program totaled $389.0 million with 1,329 loans. That compares with 1,627 loans for $558.5 million through the same period in FY 2011.

Huntington Bank was easily the largest 7(a) lender in Michigan through June 30, with 461 loans for $102.4 million, which compares to 458 loans for $91.7 million a year earlier, according to SBA data. Chase Bank was the second-largest 7(a) lender at 144 loans for $12.3 million, versus 194 loans for $43.6 million a year earlier.

Lending in Michigan under the SBA's 504 program totaled $115.6 million and 219 loans through three quarters of FY 2012, compared to 176 loans for $77.1 million during the same period a year earlier.

504 loans are coordinated by certified development corporations across the state. The Lansing-based Michigan Certified Development Corp. was the top CDC through three quarters, processing 106 loans for $61.6 million. The Economic Development Foundation in Grand Rapids was second with 41 loans for $22.5 million.

Leonard, who previously was at United Bank and Trust in Ann Arbor, said he has seen a transition in SBA lending this year, with more borrowers seeking funding for capital projects and growth, rather than refinancing existing debt that drove lending volumes last year.

"As a whole, there appears to be a whole lot more business expansions and acquisitions," he said.

Read 2250 times Last modified on Sunday, 05 August 2012 22:28

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