Bank of San Francisco Spoils Prentice's Plan for Relaxing

SAN FRANCISCO -- When Bank of San Francisco offered Thayer T. Prentice an opportunity to open a Sacramento office last year, he jumped at the chance for a job that would allow him to slow down.

As a regional manager and executive committee member at First Interstate Bank of California, "I was spending a lot of time in an airplane going to Los Angeles," he recalls. Bank of San Francisco "provided an opportunity for me to scale back, take longer weekends."

The Best-Laid Plans...

But Mr. Prentice's hopes for peace and quiet have been dashed. As California's real estate market soured, the roof fell in on Bank of San Francisco. And the bank's board has tapped the 53-year-old Mr. Prentice to replace Donald R. Stephens, the bank's flamboyant founder, as chairman and chief executive.

Mr. Prentice originally arrived in Los Angeles in January 1958 from his native Pennsylvania, taking a job his first day in town as a teller for Security Pacific National Bank. He was 19 years old.

After a stint with Bank of California and a move to Sacramento, Mr. Prentice started his own bank, Point West, in 1979. When First Interstate bought Point West three years ago, he signed on as manager of the Los Angeles-based bank's Central Valley division.

At Bank of San Francisco, Mr. Prentice has his work cut out for him. "It will be a real arduous process to turn that bank around," said Campbell K. Chaney, analyst with Sutro & Co., San Francisco.

Headquartered in the marble-lobbied building that once housed A.P. Giannini's Bank of Italy, Bank of San Francisco became a classic go-go bank following its 1979 start-up.

Under Mr. Stephens, a lawyer and real estate developer, the bank lent aggressively on land development and construction projects, and built a name as a purveyor of private banking services to the Bay Area's fast money crowd. Since 1985, assets have nearly quadrupled to $408 million.

This year, the bank collapsed even more swiftly than it rose. The parent company recorded a $10 million loss in the third quarter, mainly on commercial real estate.

Problem Assets at 15%

The loss sliced risk-adjusted capital to near the regulatory minimum. Meanwhile, problem assets at the end of September amounted to an astronomical 15% of loans plus foreclosed property. State regulators and the Federal Deposit Insurance Corp. have slapped the bank with a memorandum of understanding requiring it to boost capital and trim problem loans.

Mr. Prentice's conservative, low-key manner contrasts sharply with Mr. Stephens' flashy self-promotion. In an interview, Mr. Prentice took pains to distance himself from his predecessor, who remains chairman and chief executive of the holding company.

The new CEO criticized the "developer/entrepreneur perspective" that guided the bank and noted that "it pleases the regulators to have a professional banker" at the helm. The bank's growth era has at least temporarily ended, he said. And he vowed the bank will seek to build customer relationships instead of chasing hot deals.

With its crippling burden of problem assets, it will take vigorous leadership to keep the bank afloat. "I've got my energy back," said Mr. Prentice.

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