The rapid consolidation of the California banking market has spurred a tiny San Francisco bank to once again compete for the assets of the state's affluent consumers.
Pacific Bank, a private banking force in the late 1980s, this week hired Arthur C. Rutzen, a former head of First Interstate Bank's investments group, to lead a new wealth management unit. It is staffed with at least three other former First Interstate bankers, as well as with one veteran of First Interstate's new owner, Wells Fargo & Co.
"We're going to make a profound splash out here, because there is no longer a First Interstate," said Mr. Rutzen, who was named executive vice president. "People were very loyal to First Interstate; we hope to be able to attract those customers."
Pacific was founded in 1983 to cater to wealthy individuals. Much of its lending, however, was based on real estate and net worth instead of cash flow. When the California real estate economy slumped in 1991, Pacific was hit hard; soon it was known as the state's most troubled community bank.
Now - three years after fulfilling the demands of a federal consent order to improve its capital, liquidity, operations, and lending procedures - Pacific says it is ready to once again pursue the wealthy market. The $472.5 million-asset bank has four branches in downtown San Francisco and offices in Los Angeles and Burlingame, Calif. Outside the United States, it has offices in Hong Kong and the Cayman Islands.
Close to home, Pacific officials are hoping to take advantage of California's rapidly consolidating banking landscape. They are hoping that wealthy people in the Bay Area, where there are many, will want to consolidate their financial services at a community bank rather than deal with one of the state's banking behemoths.
"Many people still want to have a special relationship with their banker," Mr. Rutzen said. "We want to position ourselves with a Morgan Guaranty-type of quality that has us stand out as best-in-class on the West Coast."
Mr. Rutzen, 48, was president of First Interstate Investments until May, when Wells - its new owner and Mr. Rutzen's former employer - eliminated several senior investment management positions. He had been a senior vice president of private banking at Wells until late 1995.
Local accountants and attorneys - sources of key referrals for any private bank - are giving Pacific's new team a warm welcome because its members are known for their work at other banks, Mr. Rutzen said.
"We have a following," he said. "The experience and the history that many of us have here in San Francisco will allow us entree to many clients and intermediaries"
Three of the new Pacific executives are First Interstate veterans, including Stephen M. Rieden and Andrew Peterson, who came on as senior vice presidents in late spring. Another former First Interstate banker, Robert Crocker, is the new investment officer.
They were joined last month by vice president James B. Boucher, who spent the past 10 years at Wells. He is in charge of generating sales leads.
To roll out products, Pacific has contracted with Seattle-based GNA Corp. for brokerage services and with Pittsburgh-based Federated Investors for mutual fund and trust products.
Observers say Pacific has a good shot at serving affluent consumers in the Bay Area.
"They are served effectively by bigger banks in private client groups, but (San Francisco) really has a small-town atmosphere," said Sue Simon, consulting director for Spectrem Group. "Some have very high expectations that are met more by a small, private bank."
Analysts add that Pacific's president, Michael Tun Zan, has worked hard to bolster the bank - once a $900 million-asset institution - as evidenced by its second-quarter earnings, which reflect net income of $2.2 million, up from $600,000 in the year-earlier quarter.
"The bank has turned itself around," said Jeffrey A. Miller, an analyst who covers Pacific for Keefe Bruyette & Woods. "They now have the time and the ability to focus on new business areas."
