SAN RAFAEL, Calif. -- When David L. Payne took charge of Westamerica Bancorp, two years ago, he widely regarded as a spoiled rich kid who got the job only because his family was a major shareholder. He was 33 and had no previous banking experience.

The gibes grew harsher after Mr. Payne persuaded the board to freeze construction lending. Rivals, who were booking big profits on commercial real estate loans, laughed at Mr. Payne's skittishness.

He Who Laughs Last...

No one is laughing at Mr. Payne these days. Construction loans have boomeranged, cutting deeply into profits at rival California banks. Meanwhile, Westamerica is on target for its fourth consecutive year of profit growth.

And Mr. Payne is starting to get some respect.

"He has done a whale of a job," said Michael Abrahams, an investment banker at Oppenheimer & Co., Los Angles. "He's bright and aggressive, and he's focused on a no-non-sense strategy."

During the first half of 1991, Westamerica, the largest independent banking company in Northern California, earned $6.2 million, producing a respectable 0.96% return on its $1.3 billion in assets.

Much of the credit for Westamerica's improvement goes to Mr. payne's lieutenants and to his predecessor, Richard W. Decker Jr., who launched the turnaround.

Background a Plus

But Mr. payne has steered a sound course and jolted new life into the bank, observers said. Many believe that Mr. Payne's background is actually a plus. "He's not a traditional banker," said Robert W. Entwisle, Westamerica's branch banking chief. "He doesn't have all the baggage so many of us do."

Mr. Payne was still in his 20s and head of his family's publishing business when he replaced his grandfather on Westamerica's board in 1984. He was appointed chairman three years later when the bank was rocked by bad loans in Arizona, and he added the titles of president and chief executive two years ago.

"I've come here applying basic business principles in an industry where they aren't applied very vigorously," Mr. Payne said.

Prescient on Real Estate

The decision to halt construction lending is a case in point. As his competitors scrambled to book construction credits, Mr. Payne believed early on that the development bubble would burst.

"We had a hard time rationalizing how houses worth $750,000 were selling for $1 million," Mr. Payne said.

Westamerica's chief remains a conservative lender: At the end of June, total loans were down 11% from the year-earlier level. the San Rafel-based company has virtually ceased making loans outside its service area.

Earnings Improvement

Mr. Payne also has improved earnings by controlling costs and building fee income.

Westamerica's stock has languished along with the issues of other California banks. It trades at about $19 a share, or roughly eight times earnings. That is nearly the same level as when Mr. Payne took command.

With 35 branches in the fast-growing region north and east of San Francisco, Westamerica is an attractive acquisition candidate. Los Angeles-based Security Pacific Corp. and French-owned Bank of the West made overtures in the late 1980s, but talks led nowhere.

Muting His Denials

Mr. Payne used to deny categorically that Westamerica was for sale. But having been scolded by large shareholders who complained that the denials were driving down the company's stock price, he has since changed his tune.

"The board is not seeking to sell the bank, and I'm not taking a position on the issue," he said.

Driving Himself Hard

Meanwhile, Mr. Payne has become an active acquirer himself. Westamerica's business plan is to grow to at least $2 billion in assets within five years, primarily through acquisitions. The company last month agreed to buy John Muir National Bank, which has $50 million in assets and is located outside San Francisco.

When he headed his family's publishing business, Mr. Payne ran the presses, folded newspapers, and rose at dawn to make deliveries in place of absent workers. He continues to work with a vegenance and demands the same energy from his staff.

One of his early actions as chief executive was to require every officer at Westamerica branches to make a minimum of eight to 10 cold sales calls a week. The minimum has since been raised to 15.

"David is absolutely driven," said James M. Barnes, Westamerica's chief financial officer.

Demanding of Others

Those who have worked with Mr. Payne say he is warm and open but exceptionally demanding. He sizes up employees' skills coldly and is blunt in criticizing those who don't measure up.

A slight man whose baby face is partly covered by a well-trimmed beard, Mr. Payne has few pretenses. He apologizes for his small, modestly appointed office, which he considers excessive.

'Here Because I Want to Be'

His cash compensation last year was $284,000, according to Westamerica's proxy statement, less than most peers at comparably sized Northern California banks.

Although heir to a thriving family publishing business, Mr. Payne does not flaunt his wealth. He lives in Vallejo, a low-rent Navy town across San Francisco Bay from affluent San Rafael. He drives a 1985 BMW with 175,000 miles on it.

"I'm not dependent on this job," he said. "I'm here because I want to be, not because I have to be."

If Mr. Payne has a major weakness, it is that his iron will makes him impatient. Sometimes, "he has ruffled a few feathers and come on too strong," said an investment manager who knows him.

A Clash of Styles

That quality showed in 1989 when he fired and then stepped into the shoes of former chief executive Decker, a turnaround artist whose deliberate, bureaucratic approach clashed with Mr. Payne's take-charge style, sources said.

His impatience also contributed to one of his biggest disappointments: his failure to strike a deal to buy Napa Valley Bancorp., a $500 million-asset community bank based north of San Francisco.

Acquiring Napa Valley would have been a tremendous coup for Mr. Payne. Although a mediocre performer, it has an unrivaled market position in the fast-growing Napa area, a big hole in Westamerica's network.

Mr. Payne made a generous offer - about two times Napa Valley's book value - several sources said. But he turned the screws too hard trying to woo Napa's reluctant chairman, William P. Brooks, eventually driving him away.

Learning from Mistakes

"I saw growing frustration," said Michael Conners, a former Napa Valley director. "David was reaching, and Bill was playing hard to get."

The wounds are still raw for Mr. Payne. "I've done a lot of self-analysis," he confided. "I made some tactical mistakes."

Those who know Mr. Payne expect his talents will mature and his rough edges diminish with time.

Speaking of the last two years, Mr. Payne said: "I've grown a lot. I don't think that anyone who says they've got it all at 35 is being honest with themselves."

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