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Thursday, Feb 29, 2024

San Diego Private Bank Settling into New Beverly Hills Digs

Fewer than three months after San Diego Private Bank opened its first branch in Los Angeles County in the former West Coast headquarters of Time Magazine, the bank is expanding its 4,000-square-foot footprint by another 1,000 square feet.

Private Bank of America, which was named after the bank’s parent company, Private Bancorp of America, opened July 31 in Beverly Hills.

Tom Wornham, the San Diego-based bank’s CEO, said the branch will soon move its retail area from the fourth-floor penthouse to the ground floor of the building, where it will lease the additional space while maintaining offices on the fourth floor.

The reduction in retail space is a result of the bank’s in-person business model: “We go to a customer probably 80 percent of the time, versus them coming into (a branch),” he said.

Customer transactions have moved nearly entirely online, he added.

“Probably 90 percent are done outside the branch,” he said. “But I never want to give up that ability for people to come in. We use a Swiss bank model, where you come and sit down at your banker’s office and do your business.”

San Diego Private Bank’s assets rose about 18 percent over the year that ended Sept. 30, according to the company’s latest earnings report, increasing by nearly $100 million from $498 million to $590 million.

Year-over-year net loans increased by 14 percent to $446 million from $391 million, and total deposits increased to $448 million, up more than 19 percent from $375 million, the bank reported.

Net income was up, too, from $1.08 million in the third quarter of 2016 to $1.16 million in the same quarter this year.

Expenses, however, also shot up 25 percent year over year to just shy of $3.9 million. That included about $557,000 expenses related to the opening of the Beverly Hills branch.

In the past two years, Wornham said the company has also made large investments that have increased expenses during the first part of the year, then paid off in the last quarter of the year.

In the first nine months of 2016, for example, the company spent $600,000 on technology, compliance and new products and accrued expenses of $366,000 in conjunction with the bank’s new holding company, which was formed in September 2015.

Wornham said the new branch would have been up and running three months had he not taken the advice of the bankers who were hired to staff the office to establish the branch in the Santa Monica Boulevard building where it is currently located.

“It was important enough for the team that we be in that location, and I believe you listen to the people that you hire, and they were right,” he said. “If I knew everything about doing business in Beverly Hills, I wouldn’t need to have people in Beverly Hills.”

That attitude wasn’t one he adopted just for this project: Wornham, who grew up in La Jolla and later worked there, spent time in Coronado as a young man and worked for three decades in downtown San Diego, said even those communities, nearby as they may be geographically, require different business approaches.

The San Diego-based bank, founded in 2006, has branches in Coronado, San Diego, La Jolla, and Orange County’s Newport Beach in addition to the new branch in Los Angeles.

“Each branch has its own feel, it’s got its own vibe, and that is reflective of the market it serves,” he said.

Many employees at those branches live in the communities they serve, he added.

At the Beverly Hills branch, customers include high net-worth individuals, business agents, business managers, those in entertainment and those in investment related to entertainment.

“It’s like having financial advisors on steroids, because you’re earning the relationship confidence of people whose life blood is based on relationship confidence,” he said. “It’s this food chain of people having good relationships; a whole greater nuance of relationships on relationships.”

When it comes to the employees at that branch, Wornham said the bank is working to ensure they feel included in the company, even if they don’t see their San Diego and Orange counties-based counterparts often.

To that end, the bank recently installed technology to allow videoconferencing in every conference room it has, Wornham said, part of the effort to ensure those who work in Los Angeles don’t feel like they are working in an outpost.

“We knew on paper this would work, but it still takes the right people to pull it off,” he said.

What does pulling it off look like when it comes to a new bank branch?

“Success would be if we could get that branch to $100 million at the end of the year in loans and deposits,” Wornham said. “That would be a home run by anybody else’s standards. It is already a success, I think, by any stretch of the imagination, that it (will be) cash-flow positive after six months: It just doesn’t happen; in this case, it’s happening.”


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