Banks Opening Valley Branches, Stirring Competition

Competition among regional banks is heating up as new bank branches sprout up across the San Fernando and Santa Clarita valleys, giving businesses and consumers more banks to choose from and forcing financial institutions to look for ways to keep customers and attract new ones. Banks with money to lend are seeking new business in areas with affluent populations and they’re expanding their footprint to get business from those wealthy clients. First Republic Bank, a San Francisco-based bank with about $29.7 billion in assets, plans to add a new branch location in Encino. The bank has a single Valley branch in Studio City. San Diego-based California Bank & Trust last month opened a branch in Valencia. The bank, which has assets of about $10.9 billion, also has two branches in the San Fernando Valley and four branches in the Antelope Valley. Opus Bank, based in Irvine with about $2.4 billion in assets, entered the Valley market in February with the opening of an Encino branch and has signed a lease for a location in Glendale. The banking landscape in the greater Valley region is made up of at least 35 community, regional and national banks. Competition for customers is fierce within each tier, where the banking products and services are often very similar. Observers say regional banks such as First Republic and California Bank & Trust are still large enough to make an impact in the Los Angeles market, even though they trail behind mega chains such as Wells Fargo and Bank of America. “If they are aggressive about it, it will change the business of some of the larger regional players in the area,” said Dennis Santiago, chief executive of Institutional Risk Analytics, a Torrance firm that analyzes the financial performance of banks nationwide. Mixed reactions Some financial institutions are unconcerned with the new competition, despite comments from observers who say the newcomers may siphon market share. “We understand the clients that we best serve, so I don’t pay much attention to the new players,” said David Malone, president and CEO of Community Bank, with four locations in Burbank, Glendale, Woodland Hills and Santa Clarita. Tamara Gurney, president of Mission Valley Bank, isn’t concerned, either. The bank has three locations, including two in the Santa Clarita Valley. “We serve a smaller target,” Gurney said. Others have the growing banks on their radar. Charles Jackson, president and CEO of Boston Private Bank & Trust, said First Republic is a formidable, well-run competitor. Both banks focus on an affluent client profile and both offer jumbo mortgages, wealth and deposit management, and commercial lending. “We have competed with them up and down the West Coast and they keep us on our toes,” Jackson said. Boston Private’s strengths are in commercial lending and the bank has a better wealth management service because of the quality of the analysis and the returns, Jackson said. First Republic, by comparison, is strong in jumbo mortgages and its deposit management services have been legendary. “We rarely compete on price,” Jackson said. “We compete on quality of service and quality of products.” First Republic would not discuss its Encino branch, as the bank was still waiting on regulatory approvals. The location in the 16500 block of Ventura Blvd. has several signs indicating that it is the bank’s future home. The banking institution has shown an aggressive growth posture since it was sold off by Bank of America two years ago and became an independent bank. It has been rapidly adding branches on the West and East coasts for a total of 58 locations and hiring new employees as relationship managers, business bankers and portfolio managers. It ranked No. 3 in the Forbes list of the 100 best banks for 2011. This year, First Republic opened a company in Delaware to offer trusts with significant income and estate tax benefits. And First Republic looks to open 10 new branches with a concentration in New York and Boston in the next year, Chairman and CEO Jim Herbert said in a conference call with analysts. “We have improvement activities, expansion activities going on in three or four other offices and we are actually relocating a couple to improve their locations this year, as well,” Herbert said during the call. New locations Regional banks are paying close attention to market demographics, particularly income data, as they select locations for new branches. By opening in the Santa Clarita Valley, for example, California Bank & Trust has tapped into an area with a median household income of $76,384 and where 34 percent of the working population earns a salary of $100,000 or more, according to 2010 census data. Steven Borg, senior vice president and corporate marketing director, said the bank chose to open the 6,000-square foot branch at the Valencia Gateway retail center for two reasons: first, the market demographics were growing and projected to keep growing; second, because the bank did not want to pass up getting a corner location with favorable traffic patterns. Gurney of Mission Valley Bank said she’s surprised California Bank & Trust opened a branch in Santa Clarita. The area is saturated with banks, she said. National players like Chase and Wells Fargo as well as regional players such as Mission Valley, the Bank of Santa Clarita and Santa Clara Valley Bank all have a presence in the area. “You can always wait for the perfect time, but the space might not be available or not available at the right price,” Borg said of the move. The California Bank & Trust branch in Valencia includes a regional office serving consumers and a commercial banking department for small- and medium-sized businesses. And while banks like First Republic and California Bank & Trust already existed in the Valley region, Opus Bank just entered the banking scene in February. The bank is positioning itself as an alternative for clients fed up with dealing with the national banks, said Chairman and CEO Stephen Gordon. “We will meet their financial needs at a time when the (larger) banks are paralyzed and backing out while cleaning up their legacy problems,” Gordon said. Formerly known as Bay Cities National Bank in Redondo Beach, Opus got its start in September 2010, following an infusion of $460 million by Gordon and 25 other accredited investors. In March 2010, the bank had assets of $266 million. At the end of March 2012, that amount had increased to $2.4 billion. In 2011, American Banker proclaimed Opus as the West Coast’s next break out bank. Until recently, Opus has grown through acquisitions. Its first target was Cascade Financial Corp. and its subsidiary Cascade Bank in Washington state in July 2011. That was followed by the purchase of Fullerton Community Bank in a deal valued at $50 million in November 201l. Over a period of six months, Opus raised $100 million in capital from its investors and began to open new branches in California and Washington State. The bank plans to open a Glendale branch by the end of the year.