Tiny Camarillo Bank Carves Out a Niche Among Fiscal Giants

Step inside the office of Robert E. Means, president of tiny Camarillo Community Bank, and the first thing you notice is that he doesn’t close the door behind you.

“One thing I’ve never done is close my door since we opened the bank” in 1979, said Means.

That’s just one way this single-office bank tries to portray itself as an accessible, service-minded alternative to its two dozen competitors, many of which are branches of huge banking chains that dwarf Camarillo Community’s $40 million in assets.

The bank was started with the idea of providing Camarillo’s 49,000 residents with “the personal service an independent could give,” Means said. The bank’s original directors included a plumber, a pharmacist, a real estate agent and two bankers, including Means.

And, after early growing pains, Camarillo Community is prospering. In the first nine months of this year, the bank’s profit climbed 37% from a year earlier, to $391,000. This represents a return on average assets of 1.37%, well above the 1% return considered the benchmark of excellent performance for banks. Means expects the bank to earn just under $500,000 for the year.

Despite Camarillo Community’s success, however, it is open to question whether such a small bank can remain independent given the wave of banking deregulation and mergers that are swallowing up banks big and small nationwide. Camarillo Community already has rebuffed one takeover offer.

But Gerry Findlay, a Brea publisher of banking newsletters, said Camarillo Community Bank can stay independent “if it keeps its loan losses in balance and its cost of operations under control.” Frank Sabetta, president of Charter National Bank in Encino, another midget bank, with only $50 million in assets, said Camarillo Community has “the opportunity to continue to prosper” because it offers stability.

Camarillo Community’s officers, unlike bank branch managers who are regularly transferred, have long tenures in Camarillo that enable them to cultivate lasting relationships with customers, Sabetta said. “The customers recognize that,” he said.

Still, if another bank makes an attractive offer, Camarillo Community’s directors have an obligation to take the bid to their stockholders, he said.

Sabetta knows that from personal experience. Last month, his bank, despite showing a consistent profit, announced that it planned to be acquired by Bank of Industry. The reason? Charter’s stockholders liked the price they were offered.

At the moment, however, Means has no intention of selling. One of the reasons he helped start Camarillo Community was so he could be his own boss. Means, now 54, put in 24 years with Security Pacific National Bank and five other banks in Southern California before becoming president of Camarillo Community.

In 1978, Means joined with Gene Randall, who worked with Means in the early 1970s at Commercial & Farmers Bank in Ventura, to plan Camarillo Community. (Commercial & Farmers later was acquired by Standard Chartered PLC of Britain, which also owns Los Angeles-based Union Bank.)

Camarillo Community opened with $1.25 million in capital. Means, Randall and the other five original directors invested $375,000, and the balance was raised by selling stock to other Camarillo residents. Means invested $50,000; his 4% of the bank’s stock is now worth about $135,400.

But Camarillo Community is a thinly traded stock. Less than a dozen of the bank’s 297 stockholders trade their stock each year, Means said. The stock, which sold at first for $10 a share, recently traded for $11.75 a share.

As a major shareholder, Means has an incentive to keep costs down. Overhead is practically a four-letter word. The bank shuns expensive advertising campaigns designed to draw deposits from outside Camarillo and makes do without an advertising or public-relations firm.

The bank does pay competitive interest rates and, despite having only one automated teller machine (ATM) itself, its customers have access to a statewide network of ATMs--just as the big banks do. But Camarillo Community thinks that’s where the similarity ends.

The bank sells its customers on its fast service. Most loans are approved in a day or two because Camarillo Community doesn’t have to send the applications to a central loan office elsewhere.

Camarillo Community’s loan portfolio is a lesson in conservatism: It has $9 million out in business loans, $8 million in home mortgages and $7 million in personal installment credit. No energy loans. No agricultural loans. No commercial real estate loans.

“We just stick with the local area,” Means said. “Our whole theory has been to serve the community and make a profit, rather than just increase the growth total.”

Camarillo Community has good reason not to equate mere growth with success. Not too long ago, growth nearly cost the bank its independence.

Maintain Level of Capital

The $1.25 million invested by the bank’s original owners was the minimum capital required at the time by banking regulators to open a bank. Once a bank is operating, it must maintain a certain level of capital, at least 5 1/2% of its assets. Thus, as the bank’s assets grow, so must its capital.

(Capital is the money invested in a bank. It can include the owners’ investment and profits that have been reinvested in the bank, known as retained earnings. A bank’s assets include cash, loans it has made, securities it has invested and its property and equipment. Deposits, however, are liabilities because the bank must pay out the money on demand.)

After Camarillo Community opened, it was not long before its directors realized that their initial investment was not enough to keep pace with the bank’s growth prospects.

In 1984, the Federal Deposit Insurance Corp., the agency that insures savers’ deposits in commercial banks, stepped in and ordered Camarillo Community to pump up its capital from 5 1/2% of its assets to 6 1/2% within six months, Means said.

The bank had two options: sell more stock or merge with another bank. The bank began making plans to sell more stock. But nearby Ventura County National Bank sensed opportunity.

Ventura County National, which specializes in commercial banking, offered to buy the bank. “We would have kept its community image and expanded its business services,” said William McAleer, chairman of Ventura County National.

But Camarillo Community’s board rejected the bid and, about the same time, announced plans to sell another $875,000 of common stock to the bank’s directors and other individuals in Camarillo.

The stock sale boosted Camarillo Community’s capital to $2 million, enabling the bank to keep growing. Since then, the bank has plowed $1 million more of retained earnings into its capital base and, at current levels, its assets can reach $50 million before it has to worry about raising more capital.

But McAleer said his bank still may have contributed to Camarillo Community’s success.

“The fact that someone came in and almost wound up with control of the bank may have spurred some people into action,” he said.