Big banks have dramatically increased their lending to small businesses in low-income neighborhoods of Washoe County, new federal figures show.
In 2000, the big banks made a grand total of two loans totaling $100,000 in low-income neighborhoods in Washoe County. In 2005, they made 184 loans totaling more than $6.6 million in low-income neighborhoods.
The study by the Federal Deposit Insurance Corp. tracks only financial institutions with more than $1 billion in assets a threshold that keeps smaller locally owned banks as well as most mid-sized regionals out of the statistics.
The statistics are collected by regulators as they track banks' compliance with the Community Reinvestment Act, a 30-year-old federal law that encourages banks to lend in their communities. Banks that perform poorly sometimes have trouble winning regulators' OK for new branches or for mergers.
In Washoe County, the numbers demonstrate the boom in small-business lending during the five-year period.
In 2000, the big banks said they made 2,777 loans totaling about $101.1 million to businesses that had annual revenues of less than $1 million.
Five years later, the number of loans had more than doubled to 7,173. Those loans to small businesses totaled $189.6 million.
The number of loans to businesses in neighborhoods described as low or moderate income definitions determined by the Census Bureau accounted for 28 percent of total lending in 2000 and 33.7 percent in 2005.
But the average size of the loans in low- and moderate-income neighborhoods declined from $43,660 in 2000 to $25,897 last year. As a result, the share of the big banks' total small-business lending that was directed to low- and moderate-income neighborhoods remained essentially unchanged at approximately 33 percent during the five years.
Small-business lending in middle-income neighborhoods accounted for 31 percent of the banks' loans in 2005 compared with 35.6 percent five years earlier.
And loans in upper-income neighborhoods accounted for 28 percent of the total last year, a number that's little changed from 2000.
Among individual lenders, Wells Fargo was the top lender to small businesses in low- and moderate-income neighborhoods in Washoe and Storey counties with more than 1,300 loans (of under $100,000) totaling more than $32 million last year.
"Our bankers talk with business owners every day and access to capital is always top of mind when discussing their key business priorities," said Kirk Clausen, Wells Fargo's regional president in Nevada.
