Bank’s Demise Opportunity for Competitors : Finance: Takeover of Bank of A. Levy is lamented by other small institutions. But they’ll act quickly to attract former customers.
They watched in disbelief last week as the granddaddy of them all, the venerable Bank of A. Levy, bowed to the pressures of the times and sold out to corporate banking giant First Interstate.
By far the biggest locally owned, independent bank in Ventura County, with 17 branches and assets of $625 million, it seemed to them that the Bank of A. Levy would be the last of the community banks to take down its signs.
Now the county’s nine remaining local banks--some so small they have only one branch--are re-evaluating their own positions.
Their conclusion: The disappearance of Bank of A. Levy is a sad moment for the county--and a wide-open opportunity for them.
There are customers to be snatched up, the kind of customers who run community-based businesses and place faith in neighborhood banks that share their hometown loyalty.
These are the kind of customers who want their loan application processed in Thousand Oaks or Camarillo, not in San Francisco or Los Angeles--the type of small-business owners who have used Bank of A. Levy for decades.
“We are going to try to fill that void,” said Stan Cohen, chairman of the board at Channel Islands National Bank, which has begun an aggressive advertising campaign to draw customers from the Bank of A. Levy.
He predicted that the county’s newspapers “will be carrying quite a few other advertisements in the next few days.”
Putting an advertisement together was easy: Channel Islands already had one on hand, leftover from the 1992 purchase of Security Pacific by Bank of America. Change a few lines, and it’s ready for the latest takeover.
But local bank officials said they don’t expect to see much more of that for awhile, if only because the remaining local banks are so much smaller than Bank of A. Levy.
Buying one of the remaining banks would not allow a major chain to dramatically increase its presence in the county--one of First Interstate’s stated goals in buying up Bank of A. Levy.
Richard Cupp, president of Ventura County National Bank, said his institution plans to aggressively pursue Bank of A. Levy’s customers. VCNB will become the county’s largest locally owned bank when First Interstate’s $86-million takeover of Bank of A. Levy is completed early next year.
“We consider First Interstate’s acquisition to be a tremendous opportunity for this bank,” Cupp said. “We expect to increase our market share.”
VCNB, which spent much of the past year under close scrutiny by federal regulators for its management of bad loans, said as recently as last month that it also was talking with a potential merger partner. But Cupp said the bank is no longer pursuing that option, at least not now.
For good reason, said David Meadows, an analyst with SNL Securities in Charlottesville, Va., who follows VCNB.
“With A. Levy getting ready to take off, they are in a good position,” Meadows said.
Cupp and his counterparts at the county’s other small banks say they do not fear competition from Bank of A. Levy’s replacement. In fact, most said they feel less threatened by First Interstate, which has 1,093 branches sprawling across the 13 Western states.
While the president and chief executive of Ojai Valley Bank, John Reynolds, said he will be sad to see the Ventura County stalwart down the street from his office disappear, he admits it might be good for his business.
“Actually, competition would be tougher dealing with them than with First Interstate,” Reynolds said. “Bigger banks are easier competition.”
Reynolds said the Ojai bank, founded in 1973, has deliberately established a niche for itself that would not even pique the interest of giants like First Interstate.
“We’re the leading construction lenders in the valley,” Reynolds said. “Primarily to customers building homes. And there simply are not too many financial institutions interested in construction lending.”
Simi Valley Bank, with four offices in Simi Valley, has carved its own niche, catering mostly to small and medium-sized local businesses, but also serving one major customer: the city of Simi Valley.
General Services Director John McMillan said the city moved its accounts from First Interstate to Simi Valley Bank about 10 years ago. The city’s payroll of $1.5 million to $2 million a month is processed through the bank, as well as city fees from the sewer and water districts.
“One of the primary benefits is that the money stays with the local community,” McMillan said. “But it turns out that the services that they provide and their fees are considerably lower than some of the bigger players.”
When the city was first negotiating with Simi Valley Bank, McMillan noted that it was the only one willing to count the change from the city transit system’s fare boxes free of charge.
Janice France, Simi Valley Bank’s chief financial officer, said she expects the bank to pick up deposits from former Bank of A. Levy customers.
“We found that when the First State Bank of the Oaks was sold to First Interstate (in January), our deposit rate growth was tremendous,” France said.
While customers value name recognition when they drop by the local bank to cash a check, community-based bank officials said they believe their customers prize the accessibility of loan officers even more.
“There aren’t a lot of channels to go through,” said Douglas Shearer, president and chief executive of Camarillo Community Bank. “You want a decision? It’s easy. All that is done right here.”
David Zarraonandia, a Simi Valley businessman who with his family runs Pre-Con Products, a manufacturer of concrete construction products, said he banks with Los Robles National Bank for just that reason.
“I can walk right into the president’s office and sit down and he’ll talk to me,” Zarraonandia said. “Last week we got a $25,000 loan on one afternoon’s notice. We’re not even that big of a customer, but they know our business.”
He said his family used to do all their banking with Bank of America, but decided the service was too impersonal and moved most of their business.
“At the bigger banks, the person that you’re talking to doesn’t have the authority to really do anything,” he said. “I think it’s easier for a loan officer to say, ‘Sorry, downtown didn’t approve it.’ ”
But Pre-Con Products still uses Bank of America for payroll, because its many branches offer more convenience for their employees. Los Robles has only one branch.
As long as there are local businesses, there will be local banks, said Joseph Nesbitt, president of what will be the county’s oldest locally owned bank once Bank of A. Levy is gone: Citizens State Bank, with branches in Santa Paula and Fillmore. A third branch, in Piru, has been closed since the Jan. 17 earthquake.
“There is always a need for a community bank,” Nesbitt said. “There has to be an alternative to chain banks. We can’t compete on the big loans; we don’t even try. But customers will come for the extra service we offer.”
The hunt for those service-seeking Bank of A. Levy customers is already beginning. David Bouchet, senior vice president at Ventura-based American Commercial Bank, said the bank will begin advertising within a few weeks in hopes of wooing some of those customers.
“I don’t like saying, ‘Ha, ha, you’re dead,’ ” Bouchet said. “But we will definitely be doing a lot of advertising.”
Locally Owned Banks *American Commercial Bank
Founded: 1972 in Ventura
Assets: $109 million
Camarillo Community Bank
Founded: 1979 in Camarillo
Assets: $71 million
Channel Islands National Bank
Founded: 1985 in Oxnard
Assets: $62 million
Citizens State Bank
Founded: 1929 in Santa Paula
Assets: $75 million
Branches: 3 (Piru branch closed by earthquake)
First National of Ventura
Founded: 1987 in Ventura
Assets: $36 million
Los Robles National Bank
Founded: 1987 in Thousand Oaks
Assets: $68 million
Ojai Valley Bank
Founded: 1973 in Ojai
Assets: $53 million
Simi Valley Bank
Founded: 1981 in Simi Valley
Assets: $92 million
Ventura County National Bank
Founded: 1982 in Oxnard
Assets: $316 million
Source: bank officials