The vitality of bank branches may have been impacted by online banking, but establishing traditional branches is still a prevalent strategy for some banking companies such as First Foundation Bank and the Bank of Southern California.
The two companies recently opened branches in the Valley region – First Foundation in Sherman Oaks and Bank of Southern California in Westlake Village.
First Foundation, based in Irvine, has multiple locations in the Los Angeles market, but the opening of the Sherman Oaks branch marks its first location within the San Fernando Valley.
“Even as we expand into Dallas, Texas, and recently announced our planned merger with Naples, Florida-based TGR Financial, we remain committed to core markets in California,” Scott Kavanaugh, First Foundation’s chief executive, said in a statement. “Sherman Oaks is a great community and we have found some wonderful bankers to lead our efforts.”
The branch currently has five employees in a location with 3,100 square feet. Veteran bank manager Gary Ketenchian serves as the branch manager. “This is a vibrant and growing area within L.A, and we have hit the ground running bringing our services to clients who appreciate the meaning of true relationship banking,” Ketenchian said in a statement.
Bank of Southern California’s Westlake Village location is also its first in the Conejo Valley. The bank is based in San Diego and has branches in several counties throughout Southern California. It caters to individuals, professionals and small-to-medium businesses.
Building relationships
The full-service branches opened by the two companies come as the adoption of technology to conduct banking has been hyper-accelerated by the COVID-19 pandemic. The trend is currently compounding with the pre-existing reality that physical branches are in decline.
According to former Senior Economist Jordan Van Rijn of the Credit Union National Association, the number of bank branches, including headquarters, peaked at nearly 100,000 in 2009 before declining to 79,974 by year-end 2020. Van Rijn wrote in a post that the factors behind the decline included “low interest rates, rising regulatory costs and customers increasingly turning to ATMs, online banking and mobile apps to conduct financial transactions.”
However, the utility of establishing branches in the current market is not quite a lost practice.
Beth Mills, senior vice president of communications for the Western Bankers Association, wrote in an email to the Business Journal that banks have been transforming branches to adapt to customers’ more complex financial needs, as well as their consultation needs.
“Branches are becoming more of a place for relationship building between the bank and their customer, with less of a focus on transactional activities,” Mills explained. “This is especially the case where new branches are being opened.”
First Foundation’s Chief Operating Officer Lindsay Lawrence and Bank of Southern California’s Chief Banking Officer Richard Hernandez see the value of in-person services that have both a sentimental and practical draw.
Lawrence said that technology has helped people handle the menial sides of banking. The caveat, Lawrence said, is when people need assistance or have pressing questions about things such as buying a home, starting a business or planning for retirement.
“For those moments, that’s where coming into an office and seeing the whites of someone’s eyes is so important,” Lawrence said. “We’re not going to be the bank on every single corner, but we’d like to be on a corner in your community.”
First Foundation saw value in establishing a branch in Sherman Oaks because its own expansion goals were coupled with client demand for traditional banking services as well as wealth management.
Lawrence said that prior to Sherman Oaks, the bank had several clients seeking wealth management services but were reluctant to choose First Foundation due to the distance between themselves and the nearest branch. The area, according to Lawrence, has plenty of businesses and individuals that added to the appeal of creating a branch.
“You get great opportunities to build both the business side as well as the personal side if you do a good job,” she said. “There’s definitely opportunity there if we can deliver and bring in the right folks to help win relationships.”
Marketing strategy
Hernandez echoed similar points. “Our bank is very much a relationship-driven bank,” he said. “So there’s still a lot of one-on-one interaction that the business owners feel comfortable dealing with, and they expect to see it. It’s a little bit different than going to a large bank.”
Senior Vice President and Relationship Manager Shelley Gibson will oversee expansion of the branch’s client base within the region and develop client relationships. Gibson is a graduate of California State University – Northridge.
Hernandez said the Bank of Southern California leans on involvement in the communities where its branches are located as a marketing strategy. “Not a lot of marketing dollars are spent on things other than us supporting local community charities and things like that, and that’s how word of mouth spreads for us,” he said.
In a statement, Hernandez said establishing a branch in Westlake Village supported the bank’s expansion efforts and allowed the bank to meet the growing demand of Ventura County businesses.
“Westlake Village is attractive, not only because of its proximity to the bank’s existing footprint, but also because of the number of businesses in the region left unserved by larger banks,” Hernandez added in the statement.
Hernandez is of the opinion that there is a need for commercial banking to have a presence in the communities they serve due to client loyalty. “If you try to bank a community without a presence, just doing it online, it clearly wouldn’t work,” he said.