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Banking Success Stories Have Different Endings (1)

Banking Success Stories Have Different Endings Oldest Community Bank in Valley Plans on Staying Right Where It Is By JACQUELINE FOX Staff Reporter The First State Bank of California has survived two recessions, a decade or so of industry consolidations and the most destructive earthquake to hit the Valley since a 6.5 trembler rocked Sylmar and much of the Northeast Valley back in 1971. The fact that, while four nearby banks were knocked completely out of commission for several days after the 1994 Northridge quake, First State, then named the Bank of Granada Hills, was up and running the next morning is perhaps a metaphor for the institution’s staying power. “We didn’t have electricity or running water, but we managed to open our doors and we were there for our customers the very next day,” said bank president and CEO Richard C. Taylor. While many community banks were being sucked up by bigger players over the last few years, Granada Hills was quietly wrapping up an acquisition deal of its own. The big difference is that it was the buyer, not the seller. The bank purchased Burbank-based First Coastal Bank last year and then changed its name to offer a more neutral presence in the Burbank community. Today, First State, originally opened in 1983, is the oldest community bank headquartered in the San Fernando Valley. The bank has roughly 4,000 deposit accounts and 1,000 loan customers. Primarily because of last year’s acquisition, the bank claims a 50-percent increase in total assets in the last 12 months, from $91 million to $135 million. Deposits have increased from $82 million to $124 million, with a consistent shareholder return on equity of about 16 percent. Taylor, at the bank’s helm since 1987, said the bank has had its share of buyout offers, but has stuck with its initial promise of staying small and focused on the middle markets, particularly the small business community. “We have been approached several times over the years,” said Taylor. “But we just felt that the offers were coming from people whose designs were not what we wanted. It’s been our structure from the very beginning to remain a community bank with personalized service. No one offered that.” How personal? Imagine this scenario: You call the bank during normal business hours and guess what happens? A real, live person answers the phone. In fact, said Taylor, “You can walk into my office any time of day. That’s what we are all about.” “We obviously have accounts at more than one bank, but most of our business is handled out of First State Bank,” said K.C. Fowler, executive director of Granada Hills Community Hospital Foundation. The Foundation has done business with the bank since the 1980s. “They have competitive interest rates and, because of their attitude of being willing to do what ever we need to do, we are able to keep our accounts fluid.” The bank has 39 employees today, many of whom came on board when the doors first opened. “When I took over we had about 34 employees. We were much smaller at that time and actually had to grow into those numbers,” said Taylor. “We have probably an average length of service here of about seven or eight years, so we’re kind of like family.” “We’ve been able to increase new product lines and services into the industry that the bigger banks have shied away from,” said Taylor. “The bigger banks often have minimum base lines for loans. A lot of them won’t look at anything under $3 million, but what about all those people who need small business loans, real estate loans? That’s where we’ve really blossomed. We target the small business community.” Ira Kaplan, owner of The Gold Rush jewelry store in Woodland Hills, said that, after going through three bank takeovers where he once did business, he’d had enough of people not knowing his name, not answering his calls and having little knowledge of the history behind his 28-year-old business. “I was a good customer at Bank of America, but they got so big the management was constantly changing and no one ever knew who I was,” said Kaplan. “So, I left, went to a small bank, then they got bought. I said, ‘Here we go again.’ After a year of that I said, ‘Enough of this,’ and went to (First State) and I am tremendously happy. I was really distressed with impersonal service, but I don’t have to worry about that now.” Roberto E. Barragan, president of the Valley Economic Development Center, said, “The Valley needs community banks like First State. Frankly, many small businesses here prefer to deal with smaller community banks because they don’t appreciate things like 800 numbers and having to go through layers of voice mail messages to get the service they need.” That’s not to say that keeping small amid an era of technological advances hasn’t produced some challenges. The emergence of the Internet, online banking and automated banking services have reshaped the industry landscape and banks like First State have felt the impact and had to adjust. “The industry probably has changed more in the last five years than in the whole 15 years that I’ve been here,” said Taylor. “We’ve moved away from being just banking and into the financial services business, and I think that’s changed us a lot. But we are evolving while trying to remain focused on our original plan to work with the local community.” First State has been designated a Super Premier Performing Bank, the highest rating offered by the Orange County-based Findley Companies, which puts out the annual Findley Reports rating the nation’s financial institutions on everything from service to fiscal liability. “I’m proud of the way we’ve adapted to new technologies and with our ability to weather the storms,” said Taylor. “The technologies we have now make the world more complex, and that’s been a challenge. But we’ve been successful at it.”

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