A year after changing its name and adding a second branch, First commerce bank has moved into the black

A bank by any other name might still handle deposits and withdrawals, but for First Commerce Bank, a new name along with a new location and a new approach to business has meant a shift to profitability.

Founded in 1984 as Brentwood Square Savings and Loan, the institution converted to a commercial bank and changed its name to Brentwood Bank of California in 1991. It then began an eight-year money-losing run, including a net loss of $427,000 in 1999.

Jack Feldman, the bank’s president and chief executive, explained that to make the bank profitable they had to write off several bad loans and tighten up the bank’s lending policies. That has resulted in a decline in the bank’s total income, which has dropped from $7.5 million in 1995 to $5.5 million last year. But the moves have bolstered the more significant figures, assets and net income. As of Dec. 31, the bank’s assets had risen to $76.9 million, an increase of 51 percent from $50.9 million a year before. The bank had net income of $1.4 million in 2000, improved from a net loss of $427,000 in 1999.

Feldman credits the turnaround in large part to aggressive business development and cost controls, which he is projecting will lead to a further increase in net income this year.

As of next month, First Commerce will have been open for business in Encino, its second location, for a year. The bank considered establishing a presence in the San Fernando Valley several years ago, but never found the right spot. When an American West Bank branch at the corner of Ventura and Balboa boulevards became available last year, the company moved its headquarters there.

Many First Commerce executives and staff members who had been recruited from American West ended up finding themselves in familiar digs. The choice of the Valley location was not made hastily, and neither was the name change.

Name of broader appeal

Wendy Moskel, executive vice president and chief operating officer, said the bank searched for a name that would be more generic than Brentwood Bank, and one that would better lend itself to other locations, to facilitate the opening of branches elsewhere. Feldman said the bank is considering opening an additional branch office within the next year.

“We have started looking at various opportunities, but we haven’t found a site that we feel is an appropriate next step for us,” said Feldman. “We would prefer to acquire an existing branch of another bank in our market area. Since we are a business bank rather than a retail bank, we want to make sure there is a cluster of businesses around our next branch that we want to serve.”

But a location alone does not a profitable bank make.

“We have already had a 0.4 percent drop in the prime rate and are anticipating at least another 0.5 point drop,” Feldman said. “So in our estimation, we will do a minimum of 10 percent better (in terms of total income) than last year, and hopefully a lot better than that.”

Feldman and other First Commerce officials said their business is designed to cater to the needs of small businesses and high-net-worth individuals, including doctors, certified public accountants and lawyers.

“We have relatively few customers, with relatively high balances,” said Feldman.

In the next five years, Feldman expects First Commerce to have three to five branches with $250 million in assets, which would be more than triple the bank’s current asset level of $76.9 million.

Since the bank’s return to the San Fernando Valley, a large number of former American West customers have opened accounts and applied for loans. One of those customers is Barry Krowne.

“I’ve known Feldman for more than a decade, but it’s also about being supportive of small businesses, which is the backbone of our economy,” said Krowne, a certified public accountant in Northridge. “I have also referred about a half dozen clients in the last six months to the bank, because of what they offer their customers.”

Although First Commerce has only two branches, Krowne said that doing business with the institution is usually easier than dealing with larger institutions. “When you walk into the bank you get a person you know behind the counter, not just a part-time teller,” he said. “The bank also offers a courier service so that I can make deposits from my office.”

Krowne said that one customer he referred to First Commerce is a former customer of City National Bank who lives in Culver City, and they simply use the bank’s courier service to make their deposits.

Emphasis on service

“It’s our style to provide personal service,” said Gary L. Nudell, executive vice president and chief credit officer of First Commerce. “Unlike the larger banks, when you call us you get a person on the other end of the phone, not a voicemail menu. We believe that adds value to our business.”

Feldman added: “We do not believe in sacrificing personal service for operating efficiency. That’s not to say we don’t believe in operating efficiently, but if we can save a penny by eliminating our operator, we are not going to do that.”

While priding itself in personal service, First Commerce does not try to compete with the mega-banks when it comes to quantity of services. Its product offering are more limited than those of Washington Mutual Inc., Wells Fargo Bank and Bank of America.

“We don’t have every service the mega-banks have,” said Nudell. “Those services we have, we deliver as good or better than anyone.”

A First Commerce client won’t find stocks, mutual funds and insurance being sold at the branches. Nudell said the bank doesn’t add new products or services every month that their customers don’t want.

However, to reach its goal of $250 million in assets in five years, the bank is going to have to advertise along with depending on word-of-mouth referrals.

“It’s very difficult for us to get our message out to the public,” said Feldman. “It costs us the same amount of money as it does the mega-banks to purchase advertising, which we can’t afford. So we rely on direct mail, (in-branch) print (promotions), along with referrals to continue to build our business.”