The ranks of the top lenders here that participate in the U.S. Small Business Administration's loan programs have shifted, a recent report from the federal agency shows.

Walla Walla-based Banner Bank, for example, ranked fourth among SBA lenders here in the federal fiscal year ended Sept. 30, 2008, with total SBA loans of nearly $9 million, but in fiscal 2009 didn't even make the top 20 list, and says it is de-emphasizing SBA lending. Numerica Credit Union, meanwhile, has climbed onto the top 20 list and says it's looking to expand its SBA participation to include larger loans.

The list is compiled by the SBA and published annually in the Journal of Business. The fiscal 2009 list of the top 20 SBA lenders in the agency's Spokane District appears on page B4 of this issue.

"There's definitely been a bit of a shakeup of the roster of the high-volume SBA lenders," says Mark Costello, a Seattle-based lead lender relations specialist with the SBA.

Eight of the financial institutions listed among the top 20 Inland Northwest SBA lenders in fiscal 2008 aren't on the list this year. Among those eight, Banner made just four SBA loans in fiscal 2009, worth a total of $625,300. A year earlier, Banner made 16 SBA loans together worth about $8.5 million, with the largest worth $3.5 million, SBA records show.

Doug Bayne, a vice president and director of marketing at Banner, says the bank hasn't decreased its lending to small businesses, but rather now is focusing on conventional small-business loans rather than on SBA loans.

"Our customers find that they can get the loans they need without going through an SBA loan," Bayne says.

He says that for the 12 months ended in September, the number of commercial loans Banner made was up a little, though the total amount borrowed was down slightly.

SBA's Costello says that the secondary market, through which many lenders can sell the guaranteed portion of an SBA loan, essentially froze up last fall, slowing SBA lending significantly in the first part of fiscal 2009.

"About a year ago, that secondary market kind of locked up and forced several higher-volume SBA lenders to curtail their lending efforts or cease their SBA program," he says.

Costello says that throughout fiscal 2009, the volume of 504 program loans, which he says average about $700,000 each and frequently are used for commercial real estate purchases, was sluggish, as both borrowers and lenders exercised caution during the recession.

"The lenders are shying away from commercial real estate transactions with the SBA loans," he says. "A lot of the loans are going to be more equipment, working capital, and less real estate."

In addition to 504 loans, which can be used only to buy or improve land or buildings or to acquire long-lived equipment, lenders can offer SBA 7(a) loans, which can be used for those purposes plus such things as startup or working capital. Both types of loans offer significant guarantees to the lender, but are structured differently.

Costello says that changes in the SBA program implemented about mid-year and designed to help oil the small-business lending wheels spurred some increased activity.

"Effective the beginning of March, the fee under the 7(a) program was waived, and the guaranteed percentage for SBA loans for lenders was increased," he says. "You saw these distinct halves of the year."

In the end, a greater number of SBA loans were made in fiscal 2009 than in 2008, but for smaller individual amounts, resulting in lower dollar volume, according to the SBA. In fiscal 2008, the top 20 lenders here together made 430 SBA loans worth a total of about $141 million. For fiscal 2009, however, a combined 473 loans were made by the top 20 lenders for a total of just $98.3 million.

Some lenders did about the same number of loans as the year earlier, but for less total loan value. Sandpoint-based Panhandle State Bank, for example, made 40 small-business loans in the Spokane District in each of the last two years, but in the latest fiscal year, its total loan value was $5.6 million, well under the $7.8 million in such loans in fiscal 2008.

In 2008, 13 of the top 20 lenders here made individual loans of more than $1 million each, compared with just five of the top 20 lenders that did so in fiscal 2009. Also, in 2008, the lender with the lowest total loan value among the top 20 lenders reported SBA loans totaling $3.1 million, while in 2009, the lowest ranked lender's total was just $632,000.

Costello says a lot of the lenders who previously were active in another SBA program, called Express, stopped participating in that program in 2009. An Express loan is a loan or line of credit under the 7(a) program.

"A significant number of the lenders that were the main participants in the SBA Express program have ceased their SBA Express program," he says.

Some lenders view the withdrawal of larger institutions from the SBA-lending fray as an opportunity to step up their own participation. Numerica, for example, has been expanding its participation in the Express program because those smaller loans are relatively quick and simple, so they can be processed through its branches, says Larry Shintani, the credit union's vice president of business services.

In 2009, Numerica loaned a total of about $3 million through SBA programs, up from about $2.4 million in 2008. Most of those were in the Express program, with an average loan size of about $35,000, Shintani says.

"As a credit union, we find this is our opportunity to shine. As a lot of the banks are pulling out of the market, we are trying to catch up with them with the loans that we can do," he says.

Now, Numerica plans to work on adding more of the larger loans to its portfolio, including both 7(a) and 504 loans, he says.

"We have about six loans going through the 504 program right now. That's a lot for us," Shintani says. Those loans are typically processed through the credit union's business services center.