Plenty of tech executives started their first company in a garage, but Steve Sugarman might be the only bank chief who did the same. After law school and a stint with consulting firm McKinsey & Co., Sugarman set up his own consulting business in a West Hollywood carport. He then did a stint at ill-fated New York investment bank Lehman Bros. before starting up two more investment companies, the second being Cor Capital, a private equity firm that recapitalized lender Banc of California in 2010. That’s when Sugarman became a director of the bank, which is based in Irvine but also has executive offices in Beverly Hills. He was named chief executive in 2012 and president last year. The Pacific Palisades resident, who grew up in Fullerton, did it all before his 40th birthday. Sugarman sat with the Business Journal at the bank’s Beverly Hills office a day after former President Bill Clinton spoke at a huge financial literacy event put on by the bank, and three days after the bank closed on its purchase of 20 branches and more than $1 billion in assets from Puerto Rico’s Popular Community Bank – to talk entrepreneurship, how to build a skill set and the advantages of driving an electric vehicle in Los Angeles.
Question: It’s been a busy few days for you: You had the financial literacy event with Bill Clinton at USC, and right before that you closed the deal with Popular – a deal the California Reinvestment Coalition initially opposed. What was it like working with them on the deal?
Answer: I was really proud to be sitting next to Paulina Gonzalez (the coalition’s executive director) at the USC event. I think that there’s often mistrust between banks and organizations that have seen banks not do the right things historically. The CRC has general concerns about whether banks are going to serve the underserved. I probably spent a dozen hours sitting with Paulina and her members. We didn’t receive the support of the CRC at the outset because there was still need for a discussion. But through the discussions, we found a way where we could articulate what our strategic plan would do for the community.
You’re one of the youngest finance chief executives out there. How do you go about being an effective leader without having paid your dues at a larger organization?
With the trauma the banking industry had in 2008 and 2009, there’s been a dearth of young bankers coming up. I don’t know of any other bankers my age at a bank our size. But that gives me a real responsibility to make sure I’m building the team right. I’ve been blessed by having a very strong executive team, many of whom have three, four decades of experience in banking, so I can take on the things that I’m really good at: the leadership challenges, the growth challenges, the vision and strategic plan.
Is banking something you were into from a young age?
I’m not sure I ever pictured myself as a banker. I’m a little bit less traditional and I’ve taken a different path to banking than some others.
So what did you think you were going to end up doing?
Out of college I went to law school, and out of law school, I went to McKinsey as a consultant. I always thought I would be in the business world. For the first decade or so after law school, I was sort of a serial entrepreneur. And even when we made the investment in the bank, my initial role was as a director overseeing some of the strategic initiatives.
What was the transition from boardroom to executive suite like?
I do find what I’m doing now, chief executive of Banc of California, as something that’s exciting every day. It’s a great new challenge and opportunity. There hasn’t been another job that I’ve had the same passion for. But it wasn’t a straight arrow. For me, it was really just about getting the tools to succeed and then finding where I could make the biggest mark.
You left McKinsey and started your own business. What was it?
I started my first business, Sugarman Enterprises, in a garage just down the street near West Hollywood. I decided to provide advisory services for small businesses. I was about 27 or 28. I helped them with their business plans. I helped them secure some financing, helped them with their real estate needs and provided some legal services. What I found was that the need was great and the opportunity from the business perspective was great.
What kind of clients did you have?
I served new restaurants, agricultural businesses. I helped a palm tree farm down in San Diego. I worked on renovation deals in affordable-housing areas like Downey. For these businesses to get someone who had previously worked at McKinsey and done it for bigger businesses, there weren’t enough places to go to get the quality advice they needed. And I also had a law degree, had some legal experience and could review basic contract work, and was a real estate broker and could help them get a mortgage.
How did you go from bootstrapping Sugarman Enterprises to chief executive of Banc of California?
I ended up doing that consulting business for two or three years, and then I had an opportunity to move to Lehman Bros. I worked there for another two years before setting out again in 2005 and setting up a registered investment advisory firm. I started another investment firm called Cor Capital in 2009. Ultimately, that led to what’s now Banc of California.
Was this all in the L.A. area?
All of it. I’ve got deep roots in Orange County, too, so a lot of my clients have always come from there all the way to San Diego. The footprint Banc of California serves is the same geographic footprint that I’ve grown up in and known my whole life. I was born in Pasadena and grew up in Fullerton. All these businesses were right here.
You’ve had a pretty fast rise to the corner office. Do you have any major career regrets?
The only times when I’ve had regrets are times when I’ve had to be responsible for decisions I didn’t have control over. It’s probably what has made me most passionate about starting my own businesses.
What advice would you give a young businessman or -woman? Maybe someone like you who doesn’tnecessarily think they’ll run a publicly traded bank but wants to do something significant in finance?
I’d tell him or her to get started. For those people that have entrepreneurial aspirations or are passionate about something, the best thing they can do is get started down that path. Set out and form a new business, however small. Bring their ideas to capital partners. Look for jobs that build the essential tools they’ll need in the future. Oftentimes, people can take a passive approach to their careers. That can be comfortable, and that can be a great approach for a lot of folks. For those folks who are passionate about something or have the entrepreneurial bug, and want to build businesses, it takes a different kind of person. A little bit of a crazy person, in some ways.
But isn’t it hard for a young person without built-in connections to get any attention from “capital partners”?
If you build a banking relationship – even as a small startup entrepreneur – it can really help you think through how to build your budget and how to build your strategic plan. The questions banks will have are the questions that you should be thoughtful about in the first place. Even if you don’t raise money from the bank initially, you want that relationship because your aspiration should be that you want to raise money from the bank. Having that back and forth and having a bank like us watch you and help you means that when you’re ready to take the next step, you’re much farther ahead than if you just walked in off the street one day.
Was there someone you worked with who had an outsize influence on your career?
When I was at McKinsey, the leader of that office was a great guy named John Durrett. And he faced a huge challenge. It was during 2002 and the office was overstaffed and the work wasn’t there. He talked about balancing those hard decisions with the values of the company, which were that if you succeed and are doing your job well, the job’s not going away. He had to balance those things, get the economic model right and also look himself in the mirror every day and make sure that he was consistent with McKinsey’s values. I was a young associate at the time, but watching him do that is something that I think about a lot. And it actually launched me to be able to set out and start my own business, and he supported me through that process. He probably doesn’t know that, but he’s someone I think about a lot.
When you left McKinsey, what was it like to have to manage that balancing act yourself?
It was the first time I had to think about and be responsible for a bottom line. Somewhat unexpectedly, six months after I started, I had eight people working for me. They and their families were then exposed to the decisions I made. That’s part of the reason I have so much fun as a banker now. When I come across these small businesses that have earned good credit, who have earned the ability to get a bank loan – to be able to partner with them and provide the capital they need, it’s great to see the effect.
You seem to enjoy it, but bank chief executive isn’t a 40-hour-a-week job. How do you keep your life balanced?
I’m blessed with a great family. I have three kids and a wife, and so part of it is just spending time with the family. It’s great to have them at most of the events we do, where they can participate in it with me. I also grew up playing golf and continue to do that. When there’s some free time, I try to get out there. Unfortunately, that’s not as often as I might wish.
What’s your typical day like?
I usually get up about 6 a.m. As a creature of habit, I read the morning news and watch the markets open, just to make sure I’m aware of what’s going on in the world. I then spend a little bit of time with my kids and family while they have breakfast, and leave for the office around 7 to 7:30 a.m. Three days a week, I’ll be driving down to Irvine, and a couple days a week I’ll be driving here to Beverly Hills. I usually schedule conference calls on my drive, which is a great time to have uninterrupted calls.
You drive a Chevrolet Volt – not the typical car for a bank CEO. Where did that come from?
When I joined the bank, one of the first things I saw was that bankers and executives were traveling all around Southern California. They all have car allowances. So we converted all of them to Volts. We have a fleet of 40 or 50 Volts. When I go down to Irvine, it allows me to go in the carpool lane. The amount of time saved for my employees is tremendous. There’s a huge value to the bank for that, when senior employees are spending a lot less time in traffic. At the same time, it’s great for the environment. And we saved a lot of money by doing it. The bank pays less than what the car allowances were, and the benefit’s greater. I actually enjoy driving it.
STEVE SUGARMAN
Title: Chief Executive
COMPANY: Banc of California
Born: Pasadena; 1974.
Education: B.A., Dartmouth College; J.D., Yale Law School.
CAREER TURNING POINT: Starting his own consulting business, Sugarman Enterprises Inc., after leaving a consulting job at McKinsey & Co.
MOST INFLUENTIAL PEOPLE: John Durrett, former boss at McKinsey.
ACTIVITIES: Golf, ’80s music, barbequing.
