Lender Finds Success Getting Bankers Outside Its Branches

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Bad real estate loans, phony appraisals and shoddy inspections are a banker’s worst nightmare, but they’re nothing new for Curtis Reis, chairman and president of Alliance Bancshares California.


If a movie were made about Alliance it might be called the sequel to “Dead Bank Walking,” Reis joked, referring to the book with the same title about the merger of Security Pacific Bank and Bank of America.


When he took over as Alliance president in 1986, regulators had been threatening to shut down the Culver City-based bank. Four other presidents had preceded him in the bank’s six years of operation. He put in $500,000 of his own money, wrote down a pile of bad loans and pleaded for more time.


Using relationships he established during 20 years at Bankers Trust and the Los Angeles office of Crocker National Bank, Reis set out to recapitalize the bank and bring in new customers. That year, Alliance had $1.8 million in losses and a net worth of just $277,000.


Fast forward two decades, and Alliance reported net income of $3.9 million for 2004, up from $2.2 million the prior year. Total assets rose 39 percent to hit $339.5 million.

What’s more, the bank’s thinly traded shares rose 60 percent in the past year to nearly $14 each on the over-the-counter Bulletin Board. (The stock has pulled back from a high of $17.25 a share in June.)



Relationship banking


Reis attributes his ability to dig out to his own zest for building relationships. He visits with at least 20 clients or prospects each month and expects all of his bankers to be out of the office, finding new businesses that need loans to grow.


Unlike most banks that concentrate on growing deposits and providing retail services to customers, Alliance sticks with business customers. It has four branches that do close to $100 million annually in commercial loans.


There are another $100 million in commercial real estate loans, and $60 million in small business loans backed by the government. Alliance stayed away from consumer, retail and home mortgage lines because of stiff competition, but recently added asset-based lending after hiring a banker from GE Capital, the General Electric Co. unit.


“This is a bank that plunked new branches in the middle of areas where they have their best customers, and they barely even have signs out in the front,” said George Crosby, a market maker at

Maguire Investments

in Santa Maria, who owns shares of Alliance. “They aren’t like other bankers who just sit in their offices and don’t go out and meet clients.”


Reis places a particular focus on new immigrants. “There are endless numbers of businesses that fit our profile, many of which are run or owned by foreign-born Americans who have embraced capitalism but may not have all the cash and credentials of established borrowers,” he said.


He has learned from past mistakes. Once he sent a bank officer to inspect a Mexican restaurant only to discover that it had become a Chinese restaurant. “You have to know what is going on and then move quickly if you spot a problem,” he said.


Reis, who was president of the California Banker’s Association last year, is particularly leery of construction loans because of problems with inspections and disbursements that came back to haunt developers and lenders in the 1990s. (The bank hired an independent firm to examine its $50.4 million in construction loans, roughly 17 percent of its loan portfolio.)


These loans tend to have greater risks than loans on completed homes, multifamily or commercial properties because they don’t cover the full amount of construction costs. So the developer must have additional capital for the balance of a project.


Compounding the problem are price increases and delays, which are fairly common in construction. And there’s no assurance that a borrower will be able to sell the finished property because of fluctuating market conditions.


“Appraisals do not mean very much in a collapsing real estate market,” said the 71-year-old Reis, who believes that housing will level off without going into freefall. “I can tell you war stories of property in very upscale parts of Los Angeles that couldn’t be given away in the 1990s.”



*Staff reporter Kate Berry can be reached at (323) 549-5225, ext. 228, or at

[email protected]

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