Could You Add $3 Million in Noninterest Income This Year?

February 4, 2017
Could You Add $3 Million in Noninterest Income This Year?

 

Earlier this year, the SBA released its 2016 list of the 100 most active SBA lenders in the U.S. Instead of looking at who made the top of the list, I looked at the bottom. 


It’s no surprise that large national and regional banks occupy the top of the list, but the latter half is where I find great examples of community banks smartly capitalizing on SBA lending opportunities. Let’s take a look:


At the bottom of the list is a $330 million community bank doing $42 million in SBA loans. That is an achievable target for banks that want to grow their income statement with:

 

1] Increased noninterest income.

2] Increased interest income. 


If your bank was originating this volume of SBA loans at the maximum pricing of prime + 2.75% and selling the guaranteed portion of the loan, you could have approximately $3.0 million in noninterest income for the current year and an additional 1% interest income on the $10,500,000 in outstanding balances you kept. The interest income increase is based on the difference between the SBA maximum rate (currently 6.5%) and the average C&I interest rate charged by banks under $1.0 billion in assets (currently 5.43%). 


Over several years, the outstanding balances of the unguaranteed portion of the SBA loans can grow significantly, which could really improve your net interest margin and interest income!

 

Remember, when you partner with VITAL for SBA lending, we don’t add to your fixed expense. You only pay for our services when you use them. Our highly experienced team will implement a process that runs smoothly and efficiently – and is done right, every time.  

 

Click here to view the top 100 list. 

 

Would you like to see your bank on this list someday? Let’s talk. Contact us anytime. 

 

Tags: sba lending Community banks Noninterest income interest income