Deposit Statement

When locally owned and operated Citizens State Bank merged with much-larger Santa Barbara Bank & Trust last year, a little piece of Santa Paula and the staunchly independent Santa Clara Valley was lost.

Gone, townspeople feared, were the smiling tellers who addressed their customers by name, the loan officers who knew the reputations and needs of their clients, and the institutional knowledge of what makes Santa Paula tick.

But what was lost may have been refound with this week’s quiet opening of locally owned and operated Santa Clara Valley Bank.

“There are people--and it goes back for generations--who feel more comfortable having their money kept with people they know,” said county Agricultural Commissioner Earl McPhail, who opened an account soon after the bank’s 9 a.m. launch Tuesday on Main Street. “But even more than that, it makes you feel good about Santa Paula, like you’re really part of the community.”

Following a trend that has caught fire across the state and nation, the opening of Santa Clara Valley Bank is being billed by bank officials and townspeople alike as a way to better meet the area’s specific business and economic needs.

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In addition, with more people growing tired of recorded telephone messages and bureaucracy common at larger banks, officials said they expect to meet with success by making their business personal.

“It’s a matter of being able to relate to the individual and business,” said Santa Clara Valley Bank President Steve Voelker, who was chief of Citizens before the merger. “All of us here know the area, know the businesses and know the people, and can make decisions quickly based on that knowledge.

“With a larger bank, a loan decision might be made by somebody in San Francisco who’s never set foot in Santa Paula.”

The opening is also a tale of community pride and activism in which a group of people raised the millions of dollars necessary to get the bank off the ground.

Since its founding more than a century ago, Santa Paula has had the luxury of having a small community bank.

Citizens State Bank had been around since 1929 and enjoyed a 40% market share in the Santa Clara Valley until it was purchased by Santa Barbara Bank & Trust for $16.7 million in 1997.

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Lifelong resident Don Olivier said that the day it was purchased, he had a hard time falling asleep. He began thinking about founding another financial institution that would continue to offering personalized banking.

Along with local businessman Scott Rushing, Olivier began refining the idea and organizing a group of founders willing to put up $4,000 each to establish the bank, with no guarantees that their investment would ever be returned. He quickly found 112 more than willing to pony up the start-up funds.

“I was kind of surprised how fast this came together,” said Olivier, 70, whose grandfather was an initial investor in Citizens. “People really wanted this.”

McPhail and his mother, two of the founders, said the decision was easy.

“There was no guarantee that any of the money would ever be returned, but that wasn’t something that would have kept me from getting on board,” McPhail said. “Historically, Santa Paula had at least one independent bank, and not having one concerned a lot of people. . . . It’s definitely something the city needs and something all of us were more than willing to help start.”

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After securing the start-up cash, Olivier looked for investors to raise $4.5 million necessary to officially start the bank. Within five weeks, he found 269 investors and all the funds he needed.

No investor owns more than 5.3% of the bank’s stock, which limits the likelihood of a future power play to sell to a competitor, Voelker said.

In addition, during the bank’s first shareholders’ meeting in November, officials were told specifically how they wanted to see their enterprise run--for the benefit of the community.

“We were reminded about why we’re here and what we’re supposed to do,” Voelker said.

“For the most part, they’re all local and have an emotional involvement with the bank and, while they want it to succeed, they also want it to have a heart,” he added.

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The number of small lending institutions--those with less than $250 million in assets, like Santa Clara Valley Bank--has grown dramatically over the past several years.

Of the 300 or so banks operating in the state, more than 75% fall into that category, said John Stafford of the California Bankers Assn., adding that the movement toward smaller banks is growing.

This year, 22 new bank charters were issued by the state Department of Financial Institutions, up from 10 the year before.

“That’s kind of surprising,” Stafford said. “After the recession, it looked like a moribund business concept, but they have recapitalized and restructured in such a way that they’re becoming more profitable and safer enterprises to start.”

However, the trend toward bank consolidations is moving ahead as fast as ever, with 34 occurring in the state last year.

And for start-up institutions with small lending capacities like Santa Clara Valley Bank, the business is becoming expensive.

Where loan officers once kept simple ledgers, banks are now technology-driven and constantly changing, requiring massive amounts of capital to remain competitive.

But niche banking, which targets a particular area or business sector, is coming into its own as more people discover the flexibility that these lending institutions can provide.

“Small banks are hip because they make their customers feel important,” Stafford said. “But on top of that, these kinds of banks know who they’re dealing with and sometimes have a better understanding of what it is they’re there to do.”

With $4.5 million in assets, Santa Clara Valley Bank, which will soon open a branch in nearby Fillmore, has a loan limit of just $500,000 per person or enterprise.

It also has little room to gamble with its assets and has ruled out any enterprise loan that would be considered the least bit risky.

However, as the bank grows, Voelker said, the lending limit will increase as well as the kinds of loans that it can make.

“The bigger we are, the more we’ll be able to do,” he said. “But we’ll never do anything at the expense of our clients. . . . We’re here for them, and we’re interested in seeing them and the community succeed.”