2008 CEO Interview with: 1st Enterprise Bank (Los Angeles, CA) (FENB-OTC: BB), CEO, John C. Black - featuring: their full service commercial banking institution, whose highly experienced bankers personally serve mid-sized Southern California entrepreneurial businesses.
|1st Enterprise Bank (Los Angeles, CA) (FENB-OTC: BB)|
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A Strong Market Acceptance Of Their Bank
And A Strategy Of Developing Core Relationships With Small To Mid-Sized
Business In The Southern California Market Has Fueled The Growth Of 1st
1st Enterprise Bank is a full service
commercial banking institution, whose highly experienced bankers personally
serve Southern California entrepreneurial businesses, professional firms and
non profit organizations, along with their owners and key managers. Founded
in 2006 and headquartered in the Los Angeles financial district with an
Orange County regional office in Irvine, 1st Enterprise Bank offers a full
range of credit and depository services, with special emphasis on superior
customer service, sophisticated cash management services and direct access
to bank decision makers. Customers work directly with their 1st Enterprise
Relationship Banker, who understands the unique challenges of their industry
and serves as a sounding board and an active participant in their success.
For more information on 1st Enterprise Bank, please visit
Mr. Black: “It has been a very good twelve months for us. We released our 1st quarter results in April and we posted very strong results quarter-over-quarter. Our total assets were up 43% over the 1st quarter of last year. In terms of total revenue, we were up 44%, quarter-over-quarter. Our net loss for the 1st quarter was down by 50%, and actually on a cash basis we were profitable for the quarter after adding back various non-cash expenses.”
CEOCFO: What has contributed to the growth that you have achieved?
Mr. Black: “It has continued to be the strong market acceptance of our bank, of our business model and strategies for developing core relationships with small to mid-sized businesses in the southern California market. It is also the experience that we bring to this market. Our team of approximately thirty-three staff members has spent their entire careers developing relationships with these privately held businesses and their owners, and with various other professional organizations. We have a broad sphere of influence and contacts and we continue to convert these people over to us from the other major banks in our market.”
CEOCFO: What sets you apart from the other up-and-coming smaller banks?
Mr. Black: “Of the banks that have been formed in this area over the last five to seven years I would have to say that a very large number of them, probably more than 50%, are focused on ethnic niches. Their original strategies and business plans were really designed to target these specific niches. Most of the others really had a much more general business plan, which included a mix of retail business, traditional community bank type of branch banking business, various industries such as residential real estate development in addition to small to mid-sized businesses. Whereas in our case we are very focused on strictly the small to mid-sized business customer, their owners and similar types of professional service companies and organizations. We focused all of our attention and energies on those types of banking customers. Further, our operations and customer service staff really know how to service these types of accounts. They actually help generate new customer referrals through the quality of service that they provide our existing business customers.”
CEOCFO: Are referrals still the main way you get business?
Mr. Black: “Referrals are the preferred way. At least half or more of our new business opportunities come through referrals, not just from satisfied customers but also from our contacts in the professional service community; whether that be accounting firms, insurances brokerages, law firms, etc. In addition to that we utilize direct mail, cold calling strategies and simply word-of-mouth. We also sponsor and participate in various kinds of business organizations such as Vistage and Young Presidents Organization, and other similar organizations that are comprised primarily of business owners.”
CEOCFO: How has the economic climate over the year changed things for 1st Enterprise Bank?
Mr. Black: “Although we have not been directly affected by it, indirectly we get asked questions. People are concerned about safety and soundness. We spend time educating them on what makes a bank safe and sound, and the strength of our balance sheet, our liquidity position and the quality of our assets. I can say that business owners are moving somewhat more cautiously. They are concerned very much about the health and growth of their own businesses and putting off major financial decisions such as banking changes and other capital expenditure type of decisions unless they are first and foremost in their minds. Some of our customers have experienced the impact of narrowing margins as a result of increased energy costs, materials and commodities. It is also harder to grow top-line revenue in this environment.”
CEOCFO: How are you able to help your customers during these uncertain times? What can you do that might be a little different or a little above and beyond?
Mr. Black: “We continue to be a customer-driven and not a policy and procedure-driven bank. We look at every customer relationship as a unique stand-alone relationship. We don’t get caught up in situations where we completely abandon one particular industry just because there are high profile problems in that industry at one point in time. We simply look at every customer’s financial position and their needs individually and uniquely. We strive to maintain very consistent lending practices through economic cycles, whereas many of our competitors that are headquartered out of this region or out of state simply make decisions based on policy memos that come down from the top. As a result many times very good customers are impacted negatively because there is bad news about their industry out in the press. We strive to be very consistent. We also continue to stay very close to our customers so that they know that the bank is here and the bank is behind them, and so that we are aware of any changes that might be happening in their business. We also pay close attention so that we can anticipate their needs and understand what they are doing to compete more effectively. Beyond that it is the simple things that everyone talks about but not everyone delivers, and that is quality of service at every point of contact in our organization, whether it be wire transfers, customer service issues, internet banking or cash management. Everything that we do has a live person behind it who is there to solve problems and assist customers.”
CEOCFO: You started with a close-knit group who worked together in the past so that the culture is in place. but what do you look for in the new people you bring in; what are the intangibles?
Mr. Black: “We always look for enthusiasm. We always look for people that enjoy what they are doing and that enjoy working with customers. In addition, they must have a commitment to this market and really want to be in the small to mid-sized business banking arena. We look for a track record of success and people that exhibit those intangible qualities of attitude, energy, and enthusiasm. We can always provide the specific areas of training that they may need. However, they must bring to us the winning attitude and a desire to be part of a winning entrepreneurial team, which is really the type of thing you can’t teach someone.”
CEOCFO: Are there newer services that you have added or are there still things that you would like to offer?
Mr. Black: “There are both. In terms of things that we have added over the last twelve months, things that jump to mind immediately include remote deposit capture. At present, we are processing nearly 20% of our customers deposits electronically via scanners deployed at their place of business. We also have joined the Swift International Wire Transfer Network, which puts us on par with the large money center banks in terms of being able to process international wire transfers. We have upgraded both our business and personal internet banking sites and added the latest features to those. I think the last time we spoke we had our Irvine office open already; we opened that in September of last year, and it is a full-service commercial banking office located right in the heart of Orange County. In terms of additional services looking forward, we are primarily going to be focused on geographic expansion opportunities into the other important business markets in southern California. We will do that based upon identifying the right people to lead us in those markets and we will be very opportunistic in terms of where we go first based upon being able to attract the necessary talent to make the offices a success right from the start.”
CEOCFO: Are many of your customers doing their personal banking with you?
Mr. Black: “Yes they are. We provide full service personal banking services, albeit primarily to the owners, officers and key staff members of our business customers. We have a considerable number of personal-banking customers who look to us for the same level of service that we provide their businesses. We offer most types of personal credit facilities, checking, money market accounts, full-service internet banking, personal cash management services and ATM cards that work free of charge at any ATM machine in the world.”
CEOCFO: It really is all about your people.
Mr. Black: “It is all about people. There is an old line about the three most important things about real estate being location, location, location; well the three most important things about the continued growth and success of our bank are people, people, people. We are investing in training, both internal and external. We believe we have a great working environment and very competitive compensation and benefits packages for a bank of our size. We continue to look to attract the brightest and the best.”
CEOCFO: Is it easier to find the right people these days?
Mr. Black: “We think we can identify them fairly well through internal and external means although we are constantly having the opportunity to meet with new people that we have not known in the past. However, the market is highly competitive and everyone is looking for that same level of experience, talent and proven track record. We are in a highly competitive market for recruiting and we have to do everything we can to differentiate ourselves and to provide the kind of working environment that will attract and retain the best people in the industry.”
CEOCFO: There are many banks for investors to choose from, why does 1st Enterprise stand out from the crowd?
Mr. Black: “First of all you have to look at the track record of what we have done over the past 24 months. We are still widely considered one of the fastest, if not the fastest, growing de novo banks in California banking history. It has been done with core relationships, core deposit growth, and core loan growth. Our assets, both loans and investments, are high quality and have no impairments. Our funding base is 100% core relationship based deposits, and we have a very low cost of funds structure. We have no particular customer or industry concentrations. Our customer base is very diverse and it is very high-quality. It is the type of customer base that frankly everybody is out there looking for, and we have been very successful at attracting these customers and retaining them and growing with them. Second would be to look closely at the quality of our team; and you can start with our board of directors and their background, experience and the contacts that they bring to the organization in terms of continuing to fuel its growth. We will remain highly focused and disciplined in our approach to the market and in executing our business plan. I think there is going to be over the coming years a clear demarcation amongst the banks that have been formed over the last several years in terms of those that are going to be able to continue sustained growth momentum and generate the type of returns that investors are looking for. Our goal is to stand out and to be viewed as a clear top performer.”
CEOCFO: Finally, as CEO, what is your daily focus?
“My focus is on continuing to provide vision, direction, motivation,
support, and a work environment in which everyone can achieve the absolute
most that they are capable of. When you have a team of highly motivated,
highly talented people; they want to have the tools, the resources and the
ability to serve their customers in the way that they believe is the best.
Therefore, it is my job to ensure that they get those resources, tools, and
support to do what they love doing. Beyond that, I am continually
representing the bank directly with prospective customers, existing
customers, in the business community and am involved in recruiting new staff
members. Last but not least, I spend time focusing on all of the internal
controls, corporate governance issues, interfacing with the board on a
regular basis, regulators and so on. I have to ensure that the bank
continues to have proper risk management controls across all areas, not just
as they relate to credit risks, but also operational risk and all the other
areas that we constantly monitor and ensure are being adequately assessed
“We are still widely considered one of the fastest, if not the fastest, growing de novo banks in California banking history. It has been done with core relationships, core deposit growth, and core loan growth. Our assets, both loans and investments, are high quality and have no impairments. Our funding base is 100% core relationship based deposits, and we have a very low cost of funds structure. We have no particular customer or industry concentrations. Our customer base is very diverse and it is very high-quality. It is the type of customer base that frankly everybody is out there looking for, and we have been very successful at attracting these customers and retaining them and growing with them. Second would be to look closely at the quality of our team; and you can start with our board of directors and their background, experience and the contacts that they bring to the organization in terms of continuing to fuel its growth.” - John C. Black
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