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Santa Cruz County Bank ranks third in California for USDA Rural Development loans

May 16, 2010

By Jondi Gumz - Santa Cruz Sentinel

Banks that made loans to real estate developers who got caught in the housing market crash are putting aside money for losses instead of lending to jump-start the economy.

Santa Cruz County Bank doesn't have that problem.

In fact, the 7-year-old locally owned bank last month won a Lender Excellence Award from U.S. Department of Agriculture Rural Development.

The bank partnered with the agency in 2009 to make $18.6 million in business and industry loans, the third highest volume in California behind Excel National Bank in Beverly Hills and Borrego Springs Bank and 13th in the nation.

"They're a good partner," said Ron Tackett, acting director of business and cooperative programs at USDA Rural Development's Oroville office. "They've got capital. They are making loans to create and retain jobs."

USDA Rural Development also recognized two employees with Santa Cruz County Bank.

Daljit Bains, a vice president in the bank's Roseville office, was named the 2009 outstanding loan officer, and Sue Chandler, senior vice president and Small Business Administration department manager, was given the 2009 exceptional leadership award.

Bains, a longtime loan officer, joined Santa Cruz County Bank a little over a year ago with Aaron Beckman. Both came from Excel National Bank, the largest USDA lender. The pair knew Chandler and inquired about employment.

"We felt it was a good opportunity," said David Heald, president and chief executive officer of Santa Cruz County Bank, noting Chandler arrived in 2007 with USDA lending experience at Heritage Bank. "We never did B&amp;I loans with USDA before she got here."

Locally, lending opportunities were sparse in last year's recession, so the bank was willing to look outside the area to get a good return. There is more risk because it's harder for lenders to see what's happening with the economy from a distance.

"That's why we do it under a government guarantee," Heald said. "We visit all the properties, do a lot more research."

The projects that got loans included a gas station that expanded with a larger facility, a motel owner who wanted to build a restaurant and a new La Quinta Inn that had support from a local redevelopment agency.

Tackett commended Bains, who has 20 years experience, for pursuing financially sound loans and Chandler for helping the federal agency make its loan process more efficient over the years.

"We have three forms," Tackett said. "It's not complicated once you understand it."

USDA Rural Development loans are available only to rural areas of Santa Cruz County such as Watsonville and Davenport.

Gary Manfre, owner of Watsonville Coast Produce, got a 25-year USDA loan through Santa Cruz County Bank allowing his business to pay off the money borrowed to build a warehouse 11 years ago.

The wholesale produce company buys fruit and vegetables from growers around the world -- Israel, New Zealand and Chile -- and delivers to independent groceries and health food stores from San Francisco to King City, including Deluxe Foods in Aptos and Staff of Life in Santa Cruz. The market has shifted to 25 percent organic and 75 percent conventional, said Manfre, who bought the business in 1974.

When the initial loan came up for refinancing last year, the building had a higher appraised value, "yet our bank didn't want to deal with us," Manfre said.

Bigger banks offered terms that were not so favorable, requiring a rate adjustment after five years, but Pam Zamani of Santa Cruz County Bank asked Manfre what he wanted.

"In this day and age, you have an advantage working with a local bank," Manfre said. "I view Santa Cruz County Bank as the little bank that could."

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