Fifteen years and nine mergers later, the company he runs is one of the fastest-growing and most profitable banks in the Bay Area.

Indeed, in the first six months of 2000, Greater Bay has outgrown U.S. Banker's community bank ranking in terms of asset size. With $2.6 billion in total assets at the end of last year, Greater Bay just squeaked into the community bank roster, defined as those banks and thrifts with assets less than the smallest on our ranking of the second-100 largest banks (June 2000). But so far this year, it has completed two acquisitions and struck deals to buy another two: Bank of Petaluma and Bank of Santa Clara. Those purchases push its assets up to $4.2 billion on a pro forma basis, and when they're completed, Greater Bay will own 10 separate banks.

Kalkbrenner follows a strategy of "super-community banking," operating a string of small, local institutions, each with its own management and board of directors. They share a back office that also provides such things as international trade, cash management, trust and investment services. "We have all the resources, services and products of a big bank, but all of the personalized service and knowledge of a community of a small bank," the CEO says.

But it's not just acquisitions fueling Greater Bay's growth. Focused on small and mid-sized businesses and private banking, including trust and investment services, the bank has reaped the fruits of Northern California's booming high-tech economy. Kalkbrenner says that the bank has been growing assets internally by more than 30% in each of the past three years. A de novo branch it opened in Santa Clara a year-and-a-half ago is already up to about $100 million in associated assets and deposits.

In growing fast, Greater Bay hasn't sacrificed profits. Its steadily outstanding performance--return on equity topping 21% last year and averaging 19% over three years, combined with a compound annual growth rate in earnings per share of 48% over three years--put it on top of U.S. Banker's community bank ranking.

As its larger rivals--Silicon Valley Bancshares and Imperial Bancorp--Greater Bay invests in shares of the region's many technology companies. Its venture banking group has generated some hefty gains that may not be repeated as the stock market has turned against the Internet sector. In the first three months of 2000, its realized warrant positions contributed $8.6 million to the company's net income, about 32% of per-share earnings in the quarter.

The risk doesn't worry Kalkbrenner, who says that venture assets represent only about 5% of Greater Bay's total assets.

Neither does it seem to scare investors. A chart of Greater Bay's stock price over the past year looks like the exact inverse of most bank and thrift stocks, rising about 53% during a time when many others have lost half their value. And in the three months up to June 9, while tech stocks--and the banks associated with them--took a header, Greater Bay climbed more than 27% to $47.66.Kalkbrenner is still looking for acquisitions, talking with bankers at institutions with $300 million or more in assets. He projects that Greater Bay will reach $5 billion by the end of this year or in the first quarter of 2001. "That's big enough for what we want to accomplish in Northern California," he says.

At that point, will Greater Bay be big enough to make an ideal acquisition target itself? Perhaps that's what its bullish investors are counting on.

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