Feisty bank jumps into Southern California

By Michael Liedtke
Associated Press

Bank of the West CEO Don McGrath talks with tellers in the bank's Concord, Calif., branch on Friday. The San-Francisco-based bank, known in six states for its whimsical marketing, is taking its shtick to Southern California. Associated Press

Now the San Francisco-based bank is ready to test its shtick on its biggest stage yet — Southern California.

To herald its arrival in Southern California, Bank of the West is launching an advertising blitz this week trumpeting how it has "gotten bigger by acting smaller."

The ads are designed to warm up the Southern California audience for Sept. 16 — the day Bank of the West will slap its name on 70 former United California Bank branches in Los Angeles, Orange, San Diego, Ventura, San Bernardino and Santa Barbara counties.

The new Southern California branches will mark Bank of the West's most ambitious step during a methodical expansion that has included 11 takeovers in 12 years.

None of the acquisitions has been as pivotal as Bank of the West's $2.4 billion purchase of United California Bank.

The deal fills a gaping void at a bank that has been trying to position itself as the west's most compelling alternative to the industry's giants.

"It's hard to say you are a West Coast bank if you aren't in Los Angeles," conceded Don McGrath, Bank of the West's chief executive officer. "This gives us the foundation that we needed in that market."

The United California acquisition also expands Bank of the West's presence in its more-established markets by adding 45 more branches in Northern California and the Central Valley.

Not all of the former United California branches in Northern California will stay open.

As part of an effort to reduce its annual expenses by $75 million, Bank of the West is closing 16 Northern California branches and eliminating 600 administrative jobs.

While California represents Bank of the West's stronghold, the bank operates 75 branches in five neighboring states — Oregon, Nevada, Washington, New Mexico and Idaho.

Bank of the West has made its acquisitions in a series of deals backed by BNP Paribas, a French bank that has been a major shareholder throughout the shopping spree.

BNP assumed full ownership of Bank of the West's holding company, BancWest Corp., in a $2.5 billion deal late last year. BancWest also owns First Hawaiian Bank.

Bank of the West ranks among California's oldest banks, with a heritage dating to 1874, when it was known as the Farmers National Gold Bank.

With just a few dozen Northern California branches, the bank remained little known until it began its early 1990s expansion. Around the same time, Bank of the West started to turn heads with its irreverent commercials and quirky promotions, such as an offer of free checking accounts for 120 years.

The formula has paid off. With $25 billion in assets, Bank of the West had earned $137 million through the first half of this year, nearly doubling its profit of $69 million at the same point last year.

"They have been very successful in bridging the gap between the big and small banks," said industry analyst Joseph Morford of RBC Capital Markets. "But it's going to take some time for them to stand out in Southern California because it's such a fragmented market."

With the United California takeover, Bank of the West inherits Southern California deposits totaling $5.5 billion in 236,000 customer accounts. That will still leave Bank of the West a minor player in Southern California's $211 billion deposit market.

McGrath is confident Bank of the West can make a significant splash in the market with a highly personal touch and catchy ads like the one featuring the bank's bear mascot ready to hit the beaches of Southern California.

"All banks have to have the same basic products with the same basic pricing, so we just have to show people we're a bank more in touch with the community," McGrath said.