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Bank of Santa Clarita (BSCA-OTC: BB) |
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December 12, 2008 Issue |
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The Most Powerful Name In Corporate News and Information |
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As A Traditional Mainstream Community Bank, The Bank of Santa Clarita, Focused On Products For Both Businesses And Consumers Is Pretty Much All Things To All People |
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James D. Hicken President and Chief Executive Offic James D. Hicken, an Executive Officer of Bank of Santa Clarita, was part of the management team credited with the founding and organizing of Bank of Santa Clarita and was appointed President, Chief Executive Officer and Director at inception.
Prior to founding Bank of Santa Clarita, Mr. Hicken served as Executive Vice President and Chief Lending Officer of Valencia Bank & Trust from 1996 until October 2002 when that bank was acquired by Union Bank, and served as Senior Vice President and Regional Manager for Union Bank from November 2002 until March 2004. From 1989 to 1996 Mr. Hicken served as Senior Vice President and Senior Loan and Credit Officer for Metrobank in Los Angeles, California. Mr. Hicken started his banking career at First Interstate Bank of Utah in 1978, later moving to Union Bank in Los Angeles in 1981.
Bank of Santa Clarita, founded in 2004, is the only independent, full service commercial bank headquartered in Santa Clarita and generally serves the needs of small to mid-sized businesses, professionals, entrepreneurs, and consumers. The Bank provides local, experienced decision-making and the personalized service that growing businesses need on a daily basis. Bank clients have direct access to executive management and professional staff members to address their SBA and other credit requirements, and also technology-based services that include online bill-paying, remote capture depositing, check imaging and initiating online wire transfers, among other cash management facilities, which services enable local businesses to effectively and efficiently manage their cash and credit needs. |
Financial |
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Interview conducted by: Lynn Fosse, Senior Editor, CEOCFOinterviews.com, Published – December 12, 2008
CEOCFO: Mr. Hicken, what is the focus of the Bank of Santa Clarita? Mr. Hicken: “The Bank of Santa Clarita is what I refer to as a traditional mainstream community bank. We operate in a geographical contained community north and northwest of Los Angeles, California. Our focus is introducing banking products focused on businesses and consumers at large, so we are pretty much all things to all people.”
CEOCFO: What is the economy like in Santa Clarita and how has it changed over the last few months? Mr. Hicken: “Santa Clarita was probably one of the fastest growing communities in Southern CA up until the recent slow down in the real estate environment. For anyone who has been watching the investment circles’, Land Source Communities Development, an affiliate to Lennar Corporation which is one of the nation’s largest home builders, has recently filed bankruptcy. The Land Source Communities Development is the holder in due course of the Newhall Land and Farming Company that sold out to Lennar a few years ago. They are the architect and developer on a potentially new project that is just west of us. It is going to be about 23,000 single family units. It would have been the largest development in Southern California, but that has obviously developed some issues with the bankruptcy of Land Source and the housing crisis that is going on now.
Santa Clarita Valley is home to about 275,000 people, both within the city of Santa Clarita and the surrounding unincorporated areas in the Santa Clarita Valley. It’s probably one of the largest business corridors in Southern California. We have a large amount of industrial square footage up here. Vacancies have been fairly low, and continue to remain fairly low on the industrial side. We are seeing some increase in vacancies on the office market, which is not much surprise. In terms of how the valley is fairing, the single family market as most markets, have seen some price contractions; probably somewhere between 10% and 25% and maybe a little more depending on the area. In terms of the commercial and industrial sector, those prices have remained relatively stable and maybe have softened a bit, but not very much. In terms of businesses here, it’s really all over the board. We have clients that are experiencing a very robust environment right now depending on what markets they are in. The retail sector is struggling here, like any retail sector in the country right now. Given the demographics and given the environment of Santa Clarita, it will probably fair better than most, but it won’t be immune from many of the problems that are going on today.”
CEOCFO: How has the vision changed since you founded the bank in 2004, and how has the market itself for your type of banking changed? Mr. Hicken: “Our vision hasn’t changed since we’ve opened. We are still operating with the same vision as when we started the bank in 2004. Bank of Santa Clarita was started by myself and two partners Kimberly Altobello and Frank Di Tomaso. When the bank was put together we had a very definite vision in terms of where we saw this organization going combined with a long term orientation. We have not deviated from that plan. We’ve gotten bigger since we’ve opened, but having said that, we are beginning to see some slow downs. However, that doesn’t change nor alter the direction that we’re going and the things that we want to do and the things that we’re anticipating doing.”
CEOCFO: Why are your clients choosing Bank of Santa Clarita? Mr. Hicken: “Santa Clarita has a long rich history with local community banking. Santa Clarita National Bank had been around for years and enjoyed a wonderful reputation in the Santa Clarita Valley and the surrounding communities. It was sold around 1989 to Security Pacific Bank. Just prior to its sale, there was a new community bank that had been established here by the name of Valencia National Bank, later known as Valencia Bank and Trust. They were started approximately in 1987 and sold in 2002 to Union Bank of California. I had started with Valencia Bank & Trust in 1996 and Kimberly, one of my other partners, started shortly thereafter. When that community bank sold to Union Bank of California about 18 months later, what we realized and what Kimberly was focused on was that the valley wanted its own community bank, its own icon, and an institution that was managed locally. Kimberly and I joined with Frank Di Tomaso, whom I have known and worked with previously for many years, to form a new community bank. The businesses and individuals of Santa Clarita Valley were looking for a bank that was sensitive to the needs of this valley. Therefore, people bank with us because we are the only local bank here, and because executive management and the decision makers are accessible; its neighbors banking with neighbors.”
CEOCFO: Are there services that you would like to add that you don’t provide now or changes that you would like to make in your offering? Mr. Hicken: “We’re continuing to develop new services and we are on target with where we want to be from a strategic perspective. What I mean by that is within the last 60 days, we’ve just established our SBA lending unit, which was something we envisioned from the beginning and we’re relatively on target with the timing of the creation of that particular unit. We just recently received our delegated authority for the Export-Import Bank, so that we can get involved with any clients that are exporting where we can assist them with financing in those receivables. From a cash management perspective, we pretty much have everything that the major banks have with the exception of mobile banking and we’re looking at a roll out of that new product sometime the first part of next year. We’re just releasing our remote capture product, which is very popular with banks right now. So in terms of any products, I don’t see anything in the near term, but we’re always looking for opportunities or needs the clients have in the future.”
CEOCFO: What is the mix between the consumer and business banking and would you like to see a change in the mix? Mr. Hicken: “The answer to your question is that as part of our strategic plan, we want that mix to change right now. We’re heavily oriented towards business and high-net worth individuals with preponderance towards business. That was part of our strategic plan initially. We’re in the process of opening a new office on the east side of the Santa Clarita Valley; the Golden Valley Office. It is going to be a 4,000 square foot office, specifically focused and targeted to the consumer client. We very clearly would like to see some dominance in that arena and we believe now is the perfect time to do it. If you take the Santa Clarita Valley market share by bank, Washington Mutual comprises almost 29% market share in Santa Clarita Valley followed by Bank of America at 27% market share. That is a market segment that we’re going to be going after. Given what has happened recently with the demise of Washington Mutual, we think that creates tremendous opportunity for us. There was a survey that just came out that said that nationwide community banks are now becoming the bank of choice for most businesses and that the satisfaction ratings for business that have primary relationships with community banks are much higher than the satisfaction rating with those business that have relationships with the larger banks. So we think that we have tremendous opportunity.”
CEOCFO: You recently reported your third quarter results with continued profitability and excellent credit quality; could you elaborate a bit? Mr. Hicken: “We’re ahead from a budget perspective and we’re very excited about that. Eighteen months to two years ago, we began to structure the bank in anticipation of a falling rate environment. Therefore we’re now seeing an increase in our net interest margin while others are seeing their margins decline. Those were all based on strategic decisions that we made 18-24 months ago. While I don’t think anyone could have predicted the severity of what we’re experiencing today, we somewhat predicted the environment from an interest rate perspective and so we were prepared for it, and the numbers are beginning to reflect it. In terms of the credit quality, we have never been involved with nor would we ever had been involved with any sub prime or mortgage activity. It has not been a focus of this institution. We have never been an advocate nor would we ever have participated in this real estate development and acquisition activity that has become the Achilles heel of the community banking sector. There were so many banks that were chasing yield and profitability and were doing it through that market segment. We’re an institution that will never forsake credit quality in the quest of earnings.”
CEOCFO: What do you look for in your people in terms of experience or banking ability? Mr. Hicken: “You hit on an area that really separates the average players from the exceptional players. We refer to it as the people portfolio or the human capital. That has probably been the most important aspect of any institution and it is of extreme importance to us. We spend a lot of time talking about the Southwest Airline model, because we think that they, as an organization, really understood that. They embraced it and adapted how they managed their people part of the business from almost the inception. The answer to your question is attitude. We think attitude can make a huge difference between an institution that is successful, and one that is mediocre in reputation.”
CEOCFO: In closing, why should potential investors look at Santa Clarita? Mr. Hicken: “One of the things that we think is very important is the long term growth and development of the intrinsic value of the organization. When we first started this bank in 2004, there was a move by many banks to try to get to profitability quickly as possible. We believe that the best return for the investors will be the building of a solid foundation to support future growth with a focus on developing true core earnings and core relationships. Many banks that started were so focused on trying to hit profitability within the first 18 months; they generated profitability SBA loan sales. Our argument has been that though they may have achieved profitability within the 18 months, we did not believe that they were developing true core value.
We believe long term growth and
development and the shareholder value is going to be through solid
traditional banking.” |
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“The Bank of Santa Clarita is what I refer to as a traditional mainstream community bank. We operate in a geographical contained community north and northwest of Los Angeles, California. Our focus is introducing banking products focused on businesses and consumers at large, so we are pretty much all things to all people.” - James D. Hicken |
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