BANKING—Real Personal Banking

At First Western Bank, it’s not unusual for customers to wander up to the second floor and pop into the president’s office just to chat. That’s how Tony Palmer likes it. In a financial world dominated by blue chip names and white-knuckle bureaucracies, the president and chief executive of First Western sees opportunity in going against the grain. In the 19 years since it was founded, Simi Valley-based First Western has flourished, not just by remaining small, but also by ignoring conventional wisdom about the way small banks are supposed to work. Instead of carving out a singular niche, as many community banks do, First Western offers most of the same products and services larger competitors provide. It simply does so with an eye to its particular customer base, offering retail banking and business services to its neighborhood clientele and merchant banking products to small businesses nationwide. The strategy has served First Western well. The bank, with seven branches and $200 million in assets, has enjoyed 17 consecutive years of profits. For the third quarter ended Sept. 30, First Western recorded net earnings of $1.7 million ($1.48 per share), compared to $1.4 million($1.43 per share) for the same period in 1999. Meanwhile, assets have grown from about $165.7 million in 1999. Question: What businesses is First Western engaged in? Answer: We’re an old-fashioned community bank. We offer multiple services to everybody. That’s kind of unusual for a small bank. We do Fannie Mae and Freddie Mac real estate loans; we do construction real estate loans. You can build your house. You can finance the long-term loan with us. You can do the home equity line with us. We can do the car loan. We can issue you a credit card. We’ll do your merchant processing, if you happen to be a merchant. We do everything but sell insurance and stock. Q: Most community banks have tried to carve out a niche focusing on a particular service to avoid butting heads with large institutions. Why did you choose not to? A: I think if you were to ask, what’s our niche, it’s probably giving more personal attention. Everyone talks about that. Customized service is the buzzword today. But in reality, the reason for most of the consolidations is efficiency. They’re going to cut overhead. They’re going to cut the cost of doing business and make it more profitable. In the process of doing that they cut out the personalized services. They don’t have the (number of) employees. They use computers (instead). Q: How is First Western different? A: We have people sit down at the teller station. All of our tellers except for one branch have chairs. So it’s a little more relaxed, a little more comfortable. If you have an account with us and you’re overdrawn, you usually get a call from us. You’re not going to get that kind of attention in a big bank. I was with a customer in the Fillmore office who was a Wells Fargo customer. She got tired of taking her accounts into the grocery store and standing among the potatoes, as she put it, and talking about her business. The final blow came when she had to reach a person about a payroll matter. Here you talk to people. We have an automated phone system, but it takes you to a person. And you can request a person. Q: Is it difficult to manage the manpower side with the labor market as tight as it has been? A: It’s been a real problem. All community banks are having that problem. It used to be we would steal employees from larger banks that had training programs. Now the larger banks really don’t have training programs, so we’ve implemented our own training program. We try to hire people, maybe somebody right out of high school, and we bring them in and we put them through a teller training program. We train in marketing customer service, we try to take them through as many steps in the bank as we can. Q: What kind of turnover do you experience? A: High. What happens, once they get trained, somebody else is out trying to steal them. At the lower end (of the salary spectrum), our turnover is probably about 50 percent a year. In the upper levels, it’s very stable. Q: Most of your growth has taken place since 1996, around the same time the real merger and acquisition activity occurred in banking. Did the mergers make you more aggressive? A: As bigger banks got bigger, the service level dropped. It gave us an opportunity to keep providing personal service, and it really paid off. We made a decision not only to be able to provide people, we also took the course of being very current on technology. We re-did all our computer systems. And from that we’ve been able to keep adding (services) as they come along. I wouldn’t call us a brick-and-click bank, but that’s our idea. We want to be on the Internet and provide telephone banking and various technological (advantages) but still combine that with (customers) being able to walk into an old-fashioned bank and be handled by someone individually. Q: Offering the latest in technology-based banking seems to run contrary to the idea of an old-fashioned bank. How do the two work together? A: You have to be able to provide service in an efficient way. We’re not a philanthropic organization. Since 1996, we’ve been working on an imaging system (that will provide computerized pictures of checks at the teller window). Toward the end of the year you’ll be able to do that with your own account over the Internet. Next year, we’re switching from giving back everybody their original checks to giving them a statement with all their checks imaged on the statement. It’s more efficient for us. We don’t have to manually go through the checks and put them in a statement. We don’t worry about mis-sorts that way. The postage costs go down. In addition, if you bank in Moorpark and you have to be in Chatsworth, your picture or your signature is imaged on the screen, so it comes right up at the teller station and they can approve a check right there. So technology is helping to provide a better level of service. Q: How much money do you expect to save with these changes? A: Postage will probably drop $10,000 a month. That, for us, is a significant number. Then we have employee time and I can’t really tell you dollar-wise what the time is going to do. But what it will do is, as we grow, we won’t have to add more people. And the people we have now we can use to make things go more smoothly in other areas. Q: There seem to be more community banks popping up. How are you dealing with the competition? A: There have been more and more. We don’t try to run head on head with a local community bank if they’re established in the area. What’s the purpose? If they’re already doing a good job, then there’s no reason to go in just to beat heads with somebody. There’s plenty of other areas. We’re not so aggressive that we’re trying to open two offices a year. Our plan has been more: let’s open an office, get it up and running, and make sure we’re doing a good job there before we go into another one. Q: How did you end up in banking, particularly after majoring in zoology? A: I graduated from college and was basically drafted into the Army and became a helicopter pilot. I did my tour in Vietnam, from ’70 to ’71. Nixon was trying to wind down the war and so when I got back (from Vietnam) there were no positions for helicopter pilots anymore, so they gave helicopter pilots an early out, which cut my time to two years. I had to make a quick decision on what to do. I had a cousin who was an executive in a bank, and he spoke very highly of it. So I gave it a try. Q: What is your favorite part of the job? A: I think it’s dealing with all the different people and seeing the different types of businesses our customers have. It’s really fun. You go to a business and just see what they do and how they do it. I’m somewhat mechanically oriented about things, so I like to see their processes. Q: Why have you always gravitated to independent banks? A: I just like the people contact, the community involvement, the versatility of doing a lot of different things.