List

While the threat of mergers and acquisitions still hangs over independent banks in the San Fernando Valley, the institutions enjoyed an increase in assets and customer deposits for the fiscal year ended June 30. Just one of the 10 largest banks based in the Valley suffered a decline in assets. Industry observers attributed the industry’s strength to a bustling economy. Banks are ranked on their total assets for fiscal 1999. The largest bank, Imperial Thrift and Loan Association of Glendale, reported $1.04 billion in assets, a modest 5 percent increase from a year ago. Pacific Crest Bank, ranked No. 2 on this year’s list, has grown its assets by 11 percent in the past year, to $583.7 million. Charter Pacific Bank was the only bank on the list to report a drop in assets, down 6 percent from last year. Los Robles Bank and Valencia National Bank, ranked No. 5 and No. 7, respectively, reported the biggest percentage increase in assets. Los Robles saw its assets rise 19 percent to $153.3 million in fiscal 1999. Valencia also saw its assets rise 19 percent, to $147.2 million. Besides healthy asset growth, another trend among Valley banks has been mergers. In the last year alone, two of the Valley’s largest banks have merged or been bought out. This month, Valencia Bank & Trust announced that it has agreed to buy First Valley National Bank of Lancaster. Earlier this year, American Pacific State Bank, based in Sherman Oaks, was bought by City National Corp. of Beverly Hills. Around the same time, Glendale Federal Bank was bought by the parent of California Federal Bank, Golden State Bancorp. And in 1998, Antelope Valley Bank of Lancaster was acquired by Laguna Hills-based Eldorado Bancshares Inc. Thousand Oaks-based Los Robles Bank has been in merger talks with several different similar-sized banks over the past two years, President Robert Hamilton said. The bank reported its most profitable 12 months ever in the fiscal year ended June 30, a performance he attributes to a good economy and the bank’s ability to cater to small and medium-sized businesses. Ray Dumser, president of Glendale-based Verdugo Banking Co. and chair of the Los Angeles County chapter of the California Bankers Association, said most community banks struggle to increase profits and thereby appease investors, but they eventually succumb to the pressure and sell out. Buyers are typically much larger and more profitable. Wells Fargo & Co., for example, announced earlier this year that it would pursue a strategy of acquiring smaller community banks in the Los Angeles area. “It’s difficult to grow,” Dumser said. “At some point you’re faced with finding an exit strategy. And at the end of the day, the best course is to sell to a bigger bank.” But that’s not been the case with Verdugo, whose board has repeatedly voted to remain independent. “This is a good ride,” Dumser said. Those community banks that do end up selling out are not being replaced by other community-based banks, primarily because launching a new bank in a large region like Los Angeles has become too tough, Dumser said. “It’s very difficult to compete with the large institutions in greater L.A. County,” he said. That’s not to say no new banks are being formed. Encino State Bank is one of the Valley’s newest banks, opening two years ago. Its total assets are $71.9 million, too little to make the list. Dumser believes more banks will start up in the San Fernando Valley in the next several years. For now, however, it’s the ones that are already operating in the Valley that are getting a boost from a healthy economy. Also boosting business at some Valley community banks, indirectly, have been the mergers among larger banks. Some customers, fed up with the changes and impersonal nature of some larger banks, switch to a smaller bank following a merger. “We see it when local banks merge,” Hamilton said. “The customers are used to dealing one on one, and they won’t get that anymore with bigger banks.”