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First Bank Places Winning Bets on San Diego Area

First Bank is bullish on San Diego.

In 2006, the St. Louis-based, family-owned company acquired San Diego Community Bank and its three offices in Otay Mesa, Chula Vista and Kearny Mesa. The bank’s expansion plans continue with the opening of a new branch in Chula Vista’s Eastlake neighborhood, in the Shops at San Miguel Ranch retail center, on June 25. That will be followed by a new Oceanside location planned in 2008.

“We are anxious to expand our market presence in San Diego,” said David Beall, regional president for First Bank’s San Diego office. “We’d like to have 14 new offices in the San Diego market in the near term.”

Among the bank’s 42 branches, Southern California was First Bank’s fastest-growing region in 2006, with more than $1.6 billion in loans and $2 billion in deposits, and earned the First Bank 2006 Region of the Year award.

“San Diego County is one of our key reasons for that growth, and we will continue to support it and build on it,” said John Grauten, president of First Bank’s Southern California region. “The retail and commercial business is good. You have good median incomes with family households, and this drives our retail success.”

Aggressive at acquisitions, Grauten said First Bank isn’t a “looky-loo” when it comes to dealing.

“Banks are always saying to investment bankers, ‘Bring me deals and maybe we’ll do something,’ ” he said. “That is the world of mergers and acquisitions. There is a lot of looking, and deals fall apart for one reason or another. Investment bankers know First Bank gets serious, and can triage a deal quickly and make a decision. They like to bring us opportunities.”

Added Grauten, “We will continue to grow. I would not be surprised to see us as high as 12 to 15 branches in San Diego County over the next three, four years. This is a very likely scenario.”

First Bank entered the local market in 2003, opening a commercial and industrial-lending group on B Street downtown, targeting the $5 million to $10 million and up middle market. The following year, First Bank opened a retail branch at the same location.

“It was the fastest-growing office in the history of the bank, with more than $50 million in deposits in 18 months,” said Beall.


South Of The Border

The bank’s Southern California region now stretches from Santa Maria down to within a few feet of the Mexican border in the south, where its Otay Mesa branch , a lone presence there , serves customers on both sides of the border.

“The Otay area is booming with business,” said Patti Bradfield, First Bank’s vice president and area manager. “There is a huge need for both conventional financing and non-conventional financing. Their needs are a little bit different from those in downtown San Diego.”

How so?

“A lot of times business owners operate on both sides of the border, sometimes with no Social Security numbers, sometimes with corporations put together in Mexico, rather than the U.S.,” she said. “It takes specific knowledge of both sides of the border. A lot of them have lending needs, but wouldn’t qualify for an SBA (Small Business Administration) loan, because they are not operating exclusively in the U.S.”

Business has been brisk, said Bradfield.

“We have seen a big boom in business down there , $5 million in lending since early this year in the Otay area,” she said. “That might not sound like much, but these are $100,000 or $50,000 lines of credit that they might not be able to get elsewhere. This is reaching a lot of small-business owners in that area. The business might be a maquiladora, or another office in Mexicali, Otay or San Ysidro. The lending is done on this side of the border, but the origin of the business could be in Mexico.”

Beall is enthusiastic about the region’s potential.

“We have tremendous growth at the border, and more activity all the time,” said Beall. “We should see some substantial growth, especially with the new highway (state Route 125) coming in.”

Any obstacles?

“It doesn’t have a lot of housing development,” said Beall. “If you look at where all the large banks want to put new offices, they tend to be near residential areas, and this is a drawback for the border section.”


Business On The Border

The Sept. 11, 2001, terrorist attack significantly changed the market, said Beall.

“Cross-border deposits used to be substantial,” he said. “After 9/11 and the Patriot Act, it slowed down quite a bit, with the changes in regulations relative to the documentation in opening an account. It changed dramatically. This presented challenges for a retail office.”

The challenges cut both ways, according to Ana Ramirez, vice president of the global trade finance service at Union Bank of California.

“It’s a challenge on the other side as well,” she observed. “They have to provide all of the documents that are being required, and, at the beginning, some are very resistant, due to the fact that they have never been asked for certain types of documents before. They say, ‘I’ll go to another bank,’ but when they go, the other bank requires the same documents. Once they realize this, it gets easier. It’s a re-education process.”

Agustin Liceaga, First Bank’s branch manager in Otay Mesa, believes that 9/11 “damaged border banking, especially for Mexican nationals.” But, he added, the bank has instituted programs designed to continue to smooth the way.

Beall gives Liceaga high marks for bolstering business along the border.

“Really, he has maximized the opportunities, especially in the transportation segment, with trucking companies, and the transportation of goods and services across the border,” said Beall. “This is a good source of business in this area.”

On June 25, the bank’s new Chula Vista branch is scheduled to open in the booming neighborhood of Eastlake, and is being managed by Lourdes Valdez, incoming president of the Chula Vista Chamber of Commerce. The bank’s other Chula Vista branch, on Fourth Avenue, is located in the more established western portion of the city.

Since the turnover in ownership, both this location and Liceaga’s Otay branch have been successful in growing deposits, according to Martha Estrada, vice president and branch manager for First Bank’s established Chula Vista branch.

“It’s rare to see a bank go through a conversion and grow its numbers,” she said.

According to Bradfield, the three converted branches have grown by more than $10 million in deposits since the 2006 acquisition.

First Bank’s products and services include personal banking, small business loans, home loans, and wealth management investments , all of them sorely needed, said Alejandra Mier Y Teran, executive director of the Otay Mesa Chamber of Commerce.

“It’s bold of First Bank to have facilities in Otay,” she said. “There is a big demand for it here. There is an opportunity for banks that are here to expand their market. Wells Fargo and Union Bank keep saying they’re planning to open a branch, but they never do.”


Monitoring The Market

Union Bank of California , a major presence throughout the South Bay , hasn’t ruled out Otay Mesa for a branch location, said Kevin Barrie, its senior vice president and region manager in San Diego.

“The Otay area really fascinates me,” he said. “There are great opportunities there. But, we want to see a little more fill-in. With us, we are rarely the front runner, where we would be out there first, before B of A (Bank of America) and Wells Fargo. It comes down to having higher priorities in other areas.”

Among those, said Barrie, would be a possible site in Solana Beach, and a second location in Eastlake, which “has grown tremendously,” he said.

Wells Fargo has no immediate plans for a branch in Otay Mesa, said Stephanie Grant, assistant vice president of public relations in the bank’s San Diego office.

“With the area growing so much, there are a lot of developers building in the area, but none of the developments are far enough along for us to negotiate for a branch in their complex,” she said. “It is an area we are monitoring. At some point, we probably will open a store there.”

But, as always, market forces dictate the timing, said Grant.

“Developers will first get the bigger stores in there , Lowe’s, Vons, and then have the banks, and fast-food restaurants, and others come in,” she said. “None of the developers at this point has invited banks like Wells Fargo into the complex.”

But Wells Fargo is promoting cross-border business with its Patrimonial Banking Group, which serves high-net-worth Mexican nationals with minimum deposits of $250,000.

The group, which offers certificates of deposits, savings accounts and money market accounts, has 31 team members along the U.S.-Mexico border. The patrimonial bankers partner with the bank’s private client services, international business banking, foreign exchange service, and Wells Fargo Home Mortgage.

Most of these patrimonial bankers are from Mexico, but now living in the United States, and “understand the needs of both cultures,” according to Manual Urias, Wells Fargo patrimonial banking manager.


Border Needs

Bella Heule, president and chief executive officer of the San Diego World Trade Center, likes to keep the big picture in mind.

“Companies along the border, often because of this specific location, are going to want to do business both internationally and bi-nationally between Mexico and the U.S.,” she said. “They need to be able to buy more goods from U.S. suppliers that they can turn around quickly. They need an influx of cash to buy more products and components used in whatever they are going to be exporting, and they need immediate crediting of deposits. Sometimes, it becomes so complex.”

Wendy Gillespie, principal of Frontier Trading Inc., a local exporter and president of the Otay Mesa Chamber of Commerce, said that one key to keeping a cross-border business running smoothly are solid ties with a bank.

“You need to have a relationship with a bank so there are no holds put on checks or wire transfers,” said Gillespie, who does business with Union Bank. “A lot has to do with relationships, so bankers know what you do, and your specific needs.”

At her previous bank, she said, “Every time there was a change in personnel, it would put a hold on the checks. It drove me insane. You need a bank to understand what you do as a business. A lot of border businesses are small and midsize, but they still have the same requirements as larger customers.”

It can be frustrating, said Gillespie.

“There has been so much turnover in the banking industry over the years, you don’t want to have to explain who I am, why I need this,” she said. “I need my cash flow to go properly, especially if the business is on both sides of the border.”

Time is a crucial factor for the 20-year-old company, which exports and distributes grocery products to Mexico and Central America.

“We need all of that to go very quickly,” she said. “We couldn’t afford any holdups.”

Wearing her chamber hat, Gillespie added that, “I would love San Diego to pay more attention to the cross-border region, how dynamic it is, and its growth potential. I’m looking forward to more development. We have seven manufacturers that have moved to Otay in the last six months. It’s one of the last industrial areas available in San Diego County.”

As for the ongoing debate raging over land use there , with one camp pushing for more housing, and the other camp wanting to retain industrial land for business, Gillespie added, “We want to maximize both in the correct zone.”

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First Bank Facts:

– & #8201;One of the largest privately owned banks in the country.

– & #8201;$10 billion in assets.

– & #8201;190 offices in Illinois, California, Missouri and Texas.

– & #8201;3,028 employees nationwide.

– & #8201;More than 211 ATMs.

– & #8201;Products and services include personal banking, small-business loans, home loans, and wealth management investments.

– & #8201;Headquarters in St. Louis.

– & #8201;Founded in 1910 by William F. Dierberg as Farmers Bank of Creve Coeur just outside of St. Louis.

, Pat Broderick

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