Levy Bancorp Belies Its Boring Image : Banking: The institution, based in Ventura, is taking an aggressive approach to growth through internal expansion and corporate takeovers.

Levy Bancorp, the holding company of 110-year-old Bank of A. Levy, likes to tout its stodgy, conservative image.

“No News from the Boring Bank” went Levy’s advertising campaign last year. It was the Ventura-based institution’s way of separating itself from California’s mega-banks and troubled savings and loans by focusing on its quiet financial strength.

Supporting the image is the bank’s 40-year-old president and chief executive, Marshall C. Milligan, who represents the fourth generation of his family to run the publicly held bank. You won’t find Milligan wearing Armani suits or flashy gold jewelry. Rather, his short, wavy hair and Brooks Brothers style fit the bank’s traditional values to a T.

But don’t be fooled. Levy, whose $915 million in assets makes it the largest bank headquartered between Ventura County and Glendale, is aggressively trying to expand its business through internal growth and corporate takeovers.

Levy’s size jumped by a third in just one day last fall when it bought Santa Paula Savings from Resolution Trust Corp., the federal agency that’s disposing of troubled thrifts, for a net cost of about $360,000.

Milligan is looking for other acquisitions--including satellite offices of other banks and S&Ls--that; would bolster Levy’s growth, but only in the immediate area. “If we can buy branches in Ventura County, we will,” he said.

(The bank’s existing operations, incidentally, do not appear to have been affected by the recent storms that battered Ventura County, he said.)

As for Levy itself being the target of a takeover by a bigger bank, Milligan dismisses the threat. The extended Milligan family owns 61% of Levy’s 2.9 million total shares outstanding, and even if some members wanted to cash out, it would be hard for a hostile bidder to seize the bank.

“We are extremely vocal about the fact that the bank is not for sale,” said Mary Levinson, Levy’s executive vice president.

Milligan also wants to build Levy’s assets by about 10% a year from internal growth, that is, by offering various financial services to generate more revenue from business and individual customers. The services include annuities, trust services, student loans and small-business loans.

One can get the same products and services from big banks that have Ventura County offices. But it’s the local service that keeps banks such as Levy and its cross-town rival, Oxnard-based Ventura County National Bancorp, in business.

Local branches of the big banks “don’t have the authority” to make certain loans or offer some services, which frustrates customers, and “the smaller banks don’t have the financial horsepower” to compete, Milligan said. “So we want to capitalize on the dominant role we have in this county,” he said.

But even Levy (pronounced LEE-vee) has not avoided the lousy real estate market in the county and the sharp decline in interest rates, both of which sent Levy’s 1991 profit tumbling 31% from the previous year, to $5.1 million from $7.4 million. Levy’s sour loans jumped to $26 million, or 5.4% of its $480 million in total loans outstanding, from $4.4 million a year earlier.

The lower earnings dropped Levy’s return on average assets to 0.7% from 1.2% in 1990. The ratio measures how profitably a bank employs the assets at its disposal, and a reading above 1% is considered a strong showing.

Milligan conceded that it won’t be easy to get those numbers up again. The bank’s profit this year might equal its 1990 level, but it would be generated by significantly more assets than in 1990 because of the Santa Paula Savings purchase.

“We won’t be anywhere near the return on assets or return on equity that we enjoyed” in 1990, he said. “That’s going to take some time.”

He’s not alone. Ventura County National Bancorp has announced plans to add $1.3 million to its loan-loss reserves for last year’s fourth quarter because of the recession. Through the first nine months of 1991, VCNB’s profit tumbled 49% from a year earlier, to $1.5 million from $2.9 million.

VCNB focuses more on serving businesses than individuals and, despite having been around for only a decade, has become a third as large as Levy, with $369 million in assets that it amassed mostly in Levy’s own back yard.

VCNB President William E. McAleer said that whereas his company tries to target specific services to business clients, Levy tries to be “all things to a majority of the consumers in the county” and so “offers plain-vanilla banking.”

Milligan countered that VCNB got off to a fast start because “they drew a tremendous amount of business just based on the personal relationships of their board members,” and that excluding VCNB’s recent acquisitions, VCNB’s growth also “has leveled off in Ventura County.” Milligan also said “the fact of the matter is we do as much or more business banking as a percentage of our loan portfolio as they do.”

Regardless, the local economy will continue causing both banks problems. “Businesses and individuals are reluctant to borrow money,” Milligan said. “Without the demand for credit, we’re going to have a tough time making the good loans we want to make. But we’d rather not make loans than make bad ones.”

If Levy’s growth plans contradict the bank’s stodgy appearance, so too do its spending habits take some explanation.

At its campus-like headquarters building, Milligan works at a modern but spartan desk that looks more suited to an assistant cashier. Paid a relatively modest $165,000 in 1990 (according to the most recent proxy), Milligan answers his own phone because there’s only one secretary for the whole executive floor. The only reserved spaces in Levy’s parking lot are for visitors.

Yet during 1991--as Levy’s profit was tumbling--Milligan plowed $1 million into enhancing the bank’s computer system, launched the “Boring Bank” marketing campaign and retained the employees’ incentive-compensation package.

“These are things we felt were prudent long-term investments, and I’ve never been afraid of doing that even though they impact current earnings,” he said.

Once Milligan retires, though, those decisions likely will be made by an outsider for the first time since French immigrant and dry-goods merchant Achille Levy started the bank in 1882. No heirs are being groomed to succeed Milligan, who assumed the president’s job from his dad, A.A. (Bud) Milligan, in 1982.

(Achille Levy had one son and three daughters. The son never married, but one of the daughters married a Milligan, and that family kept managing the bank. A.A. Milligan, now 74 and Achille’s grandson, remains on the company’s board. Marshall’s brother Michael, 47, is Levy’s chairman.)

“My expectation,” Marshall Milligan said, “is that the family management regime will come to an end with this generation.”