It all started three years ago with clusters of red and blue dots.

Executives of U.S. Bank, a regional giant headquartered in Minneapolis, drew up an ambitious plan to expand into the California market, a state where the bank had little presence. They didn’t know it at the time, but the plan would vault the bank from the 22nd largest in Los Angeles County all the way to No. 6 today.

In a strategy known internally as the “California initiative,” executives identified a handful of vulnerable community banks in Los Angeles that it expected to become available if the economy deteriorated.

Strategists mapped out the bank’s California branches along with those of targeted acquisitions. Red dots marked existing U.S. Bank locations; blue dots signified targeted bank branches. That speckled map allowed the bank to pinpoint the institutions that would fit best in its existing footprint.

“We mapped out our entire franchise (and) we looked at all our competitors,” said Vice Chairman Joseph Otting, who was transferred from Minneapolis to Los Angeles last year in anticipation of the bank’s expansion.

Since then, the bank, owned by U.S. Bancorp, has grown dramatically in Los Angeles, buying several high-profile failed banks from the Federal Deposit Insurance Corp. Most recently, the bank took over the large local branch network of California National Bank, which was closed by regulators Oct. 30.

“The FDIC transactions that have come along have really aided our ability to get faster and deeper into the (Southern) California marketplace,” Otting said.

While its competitors, including Wells Fargo & Co. and JPMorgan Chase & Co., bought beleaguered rivals early in the financial crisis, U.S. Bank has taken a more measured approach, analysts said. The institution has rolled up more than a dozen acquisitions in the past year of mostly community banks and thrifts.

U.S. Bank’s largest and highest-profile purchases have come mostly in Southern California, including Downey Savings & Loan, a large thrift in Newport Beach that failed late last year, and PFF Bank & Trust, a Pomona-based bank that was closed the same day.

Through the acquisitions, U.S. Bank has more than tripled its local branches. In the process, it has become the sixth largest bank by deposits in Los Angeles County – vaulting several notable institutions, including L.A.’s largest homegrown bank, City National Corp.

Already, industry observers are taking notice.

“They are going to become a player out here,” said Wade Francis, president of Long Beach bank consulting firm Unicon Financial Services Inc.

For reprint and licensing requests for this article, CLICK HERE.

Prev