Stellar business growth in an emerging local economy can be expensive. Just ask Bakersfield engineering firm executive Robert Chambers.
Serving clients in energy, utilities and government, his company has grown from zero to 96 employees over about the last five years. As a result, the office space he leases on East Commerce Center Drive has gotten rather cramped.
"We've just outgrown our space," said Chambers, president and CEO of Diversified Project Services International Inc.
So, last year he did what a lot of local businesses are doing lately: He took out a loan. Now he's preparing to move his Bakersfield employees into the "gorgeous" 18,000-square-foot office building he just purchased on Olive Drive.
As Kern County's economic recovery continues to gain steam, federal data show that more local businesses and consumers have shaken off the Great Recession and resumed borrowing money and making loan payments on time.
Besides reviving the generally profitable activity of lending, Bakersfield bankers say the recent trend amounts to a broad-based expression of economic confidence that they haven't seen in years.
Bruce Jay, president and CEO of Valley Republic Bank, which gave Diversified Project Services its roughly $2 million loan, said this spring has seen a dramatic increase in loan applications from local oil service companies, growers and real estate developers.
"We were very encouraged that there's a broader, I think, range of increasing activity through the economy than what we've seen the last three or four years," Jay said.
Local credit unions are witnessing a similar surge in lending as growing numbers of consumers have rebounded financially and taken out loans to refinance their homes or buy a vehicle.
It tends to be more restrained, wiser borrowing than occurred just before the recession, said Steve Renock, president and CEO of Kern Schools Federal Credit Union.
Nevertheless, the fact that people are willing and able to borrow at all reflects a big improvement in local household finances, he noted. While some of the improvement results from his institution's loosening of credit standards in about 2011, he said, there are also more loan applications coming in than there have been in recent years.
"Lending continues to improve, meaning that there are more borrowers coming to apply for auto loans and home loans, and there are more borrowers being approved because of their good credit quality," Renock said.
Although good credit wasn't an issue for Kern Schools borrower Geoff Holcomb, confidence in the local economy was.
A finance manager at Jim Burke Ford, Holcomb and his wife had been hoping to "downsize" from their 3,000-square-foot home to something smaller. So, late last year they took out a $243,000 mortgage loan to buy a 1,700-square-foot home in Bakersfield.
Soon enough, though, Holcomb started to have "withdrawals" from not having a yard. So, the couple took out another loan with Kern Schools to buy a bigger home measuring 2,200 square feet.
All of this would have taken place years earlier if only the economy had been better, Holcomb said.
"We're confident now that the recession -- especially in real estate -- is pretty well behind us," he said.
The latest financial reports filed by Bakersfield-based banks and credit unions document solid improvements in lending, loan delinquencies, bad debt and overall profitability. These gains are considered encouraging because these banks serve primarily local businesses, just as the credit unions consist of mainly local consumers.
In March, the city's two biggest credit unions -- Kern Schools and Safe 1 -- posted loan delinquency totals roughly half the size of a year before.
Over the same 12 months, Safe 1 boosted its loan total by 8 percent to nearly $231 million. That's more loans than the credit union had on its books at the peak of the housing boom in March 2006.
Kern Schools Federal, meanwhile, wrote off only about half as much bad debt in the first three months of this year as it did a year before -- $1.4 million worth, or about a fifth as much as it charged off near the worst of the recession in March 2009.
Both institutions make mortgage and vehicle loans. Safe 1 also offers credit cards, which Kern Schools expects to resume later this year.
Renock saw his institution's latest results as good news for the economy. Although his members aren't buying on a whim as much as they used to, he said they seem to be borrowing more responsibly by, for example, buying less expensive vehicles.
He took his members' better repayment habits as a sign that their finances have strengthened.
"I think the economy is improving, although slowly, here in the valley. And I also think that even though individuals may be doing a lot better than they were doing in the past, they're also being more prudent than they were in the past."
In March, both of Bakersfield's locally based banks, Valley Republic and Mission Bank, posted sizeable gains in lending over a year earlier.
Valley Republic grew its loan portfolio by more than $41 million in that time, an increase of 42 percent.
Jay, the bank's senior executive, said he's seeing indications from land developers and homebuilders that a good deal more loan applications may be around the corner.
"There's a lot more of that grassroots activity taking place, which I think will continue to drive activity we're seeing today," he said.
Mission's 52 percent loan growth between March 2012 and March 2013 was mostly attributable to its recent merger with Mojave Desert Bank. But Mission President Andrew Joseph "A.J." Antongiovanni said that about an eighth of that year-over-year increase -- about $8 million in business loans -- represents new lending.
Antongiovanni pointed to surging demand for loans to finance construction, oil field equipment and crop planting and harvesting. Eastern Kern's aerospace industry is also driving lending, he added, as are business owners who want to buy their own buildings instead of continuing to lease commercial space.
"I think people in general -- our customers, the business owners -- are more optimistic now," he said.
Andrew Love certainly is. He's general manager of Cognito Motorsports Inc., a Bakersfield manufacturer of lift kits and other after-market products for off-road vehicles.
With a loan from Valley Republic, Cognito recently commissioned the construction of a 27,000-square-foot building in the North Meadows Industrial Park off Highway 65.
It has since hired four new employees, bringing its staff to about 16. Plans call for hiring another four workers soon as the company moves to bring certain manufacturing processes in-house.
The investment has already improved operations, Love said. In the sprawling business park where Cognito used to lease space, communication between departments had become difficult.
Not anymore, he said: "We have a lot more contact with each of the employees and it allows us to react a lot faster."
Don Turney had a very different reason for taking out a loan with Kern Schools Federal. After spending so much money on his wife and step-daughter, the 56-year-old Bakersfield College psychology professor figured the time was right to splurge on himself for a change.
With that in mind, two months ago he bought a brand new, $62,000 BMW X5.
He said economic factors played into the decision: Although he worries about rising interest rates, he sees the economy "getting a little bit better as of right now."
More importantly, he was tired of waiting for his "dream car."
"These are all rationalizations for me getting the new car that I drooled over," he said.