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The key to quality of service for San Joaquin Bancorp has been
employee retention, which is necessary for building and maintaining good customer
relationships in the business banking area
Financial
Regional – Pacific Banks
(SJQU-OTC: BB)
San Joaquin Bancorp
1301 17th Street
Bakersfield, CA 93301
Phone: 661-281-0300
Bart Hill
President and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
Published – May 11, 2007
BIO:
BART HILL
Bart Hill, 57, grew up in the San Francisco Bay area and began his banking career after
completing a bachelor’s degree in economics at the University of California Santa
Barbara and a master’s degree in agricultural economics at the University of
California Davis. He worked at Bank of America for 13 years holding various corporate and
branch lending positions. He was hired by San Joaquin Bank as President and CEO in 1987
when the bank had $48 million in total assets and was just 7 years old.
Company Profile:
San Joaquin Bank is a 26 year old business bank headquartered in Bakersfield, California
and operating primarily within Kern County. This $740 million bank has four offices and 23
consecutive record profit years. It is the fourth largest of 22 banks operating in Kern County
and the fastest growing. US Banker Magazine recognized it as number 16 on its list
of the top 200 community banks in the United States in 2006.
CEOCFO: Mr. Hill, what was your vision
when you joined San Joaquin Bancorp and where are you today?
Mr. Hill: “San Joaquin Bank was formed
in 1980 and I was hired in 1987, twenty years ago. The bank had a good vision to begin
with, which was to be a business bank and concentrate on one segment of the market. We
provide the business community with specialty business products and remain just as focused
today as we were when the bank was formed.
CEOCFO:
What is distinctive about the county that you are serving?
Mr. Hill: “This is a large county the
size of Delaware, Connecticut and Rhode Island. For the country western music fans, both
Buck Owens and Merle Haggard, are from Bakersfield; it is a western town. We are in the
southern most part of the great central valley in California, which is a large farming
region. We are the number-three agricultural county in the United States. It is also a
large oil area, and we are producing more oil per day than the whole state of Oklahoma.”
CEOCFO:
Will you tell us about the special needs in the area of agriculture and oil perhaps?
Mr. Hill: “A bank must be able to
address the two basic businesses in this market place to be successful. You need people on
your staff that understand those businesses and so that you can take care of the primary
businesses as well as the support businesses.”
CEOCFO:
What is different that people may not think about in terms of agriculture?
Mr. Hill: “Agriculture in this part of
the United States is very diverse. If you look at the Midwest, you might grow four or five
different crops; we grow 250 different crops in this part of San Joaquin Valley. For
example, analyzing someone’s ability to generate profit from a diverse cropping
pattern is quite a bit different than if you are looking at a thousand acres of corn or
soybeans.”
CEOCFO:
How have you achieved the success of a record 23 years and are there any areas that may
need attention that you are working on now?
Mr. Hill: “We are always fine-tuning
the bank; trying not to rest on our laurels, and one of the things we are attempting to
achieve is consistency. We are not driving the car at full speed in this race because it’s
not a sprint, and when you push everything to the limit, you run into problems, such as
credit quality deterioration. We are trying to steadily take this bank off the charts, and
that would include acquiring market share and continuing our focus on the business segment
and the geography.”
CEOCFO:
Tell us about the competition locally.
Mr. Hill: “There are 22 banks operating
in Kern County and we are the 4th largest and the fastest growing bank in the
market. The largest banks are Bank of America (NYSE: BAC), Wells Fargo & Co. (NYSE:
WFC) and Washington Mutual (WaMu) (NYSE: WM)."
CEOCFO:
Why should someone come to San Joaquin Bank as opposed to one of your competitors?
Mr. Hill: “As a business bank, we have
a focus on the individual needs of the business community. It is like the butcher shop vs.
the supermarket, when you just do one part of the business, I think you can be very good
at it. We do not have ATMs or free checking, but there are things that we do have that
other banks do not have. For example, we have five people driving as far out of town as
thirty miles to do our customers’ banking for them everyday.”
CEOCFO:
How do you acquire new business?
Mr. Hill: “In the earlier days of the
bank, we were acquiring new business like all the other banks. We were calling and
knocking on doors and trying to get our business cards out there. Today, we are still
doing that to some extent, but we now have momentum, we have a reputation, we have our
customers talking about us and bringing their friends in. One of the keys to our quality
of service is that we retain our employees. In the business banking area, banking is
definitely a relationship and you cannot create a relationship without employee retention.”
CEOCFO:
How do you continue to maintain the quality of service and the personalization as you
continue to grow because that is often a problem?
Mr. Hill: “As any organization gets
bigger, you can create problems of getting further away from the customer and the
employees. It is something we work on all of the time. By keeping the employees a long
time, we are able to work against that to some extent. For example, the average length of
time that an officer has been with San Joaquin Bank is 12 years and if we had the
statistics for the industry, I think that would rank very high. Keeping employees a long
time creates a corporate history and helps pass along the goals and the standards of the
company to the younger and the newer employees.”
CEOCFO:
Are acquisitions a factor for you?
Mr. Hill: “San Joaquin Bank was formed
with only $2.2 million in equity, which is an incredibly low number and actually handicaps
a bank’s growth because you have a low loan authority. Growing the bank in the
earlier years was slow and steady. The bank has grown completely organically. Every
customer in this bank made a decision to leave their bank and come to us, so we have not
acquired any banks along the way. I suppose we would be open to that, but we are already
growing at a fast pace without an acquisition. Acquiring customers one by one allows
us know who they are and the quality of their credit and this in turn helps us maintain
the quality of the organization.”
CEOCFO:
Many banks have been struggling with the inverted yield curve scenario; how have you
managed to be successful in spite of the general economic tone?
Mr. Hill: “The entire banking industry
is complaining about the inverted yield curve, the narrowing of margins on loans, and the
slowing deposit growth, and we are complaining right along with them. We work hard at
managing our costs and have driven our efficiency ratio down. Additionally, we take very
little fixed rate interest risk.”
CEOCFO:
Why should investors be interested in San Joaquin Bancorp?
Mr. Hill: “When you look at the bank’s
steady successful track record, if past performance is an indication of future
performance, you would certainly believe that this bank is moving ahead, steadily and
conservatively. I would like to think that when investors look at our past record they
will recognize us as a management team who knows who we are and where we are going.”
CEOCEO:
In closing, as CEO, what is your focus day-to-day?
Mr. Hill: “We operate this bank with
very loose job descriptions on purpose. I like to say, ‘If the phone is ringing
and everybody is busy, pick up the phone even if it’s not your job’. We are all
doing customer service because that is what we are selling. Our money looks just like the
other banks.’ It is the quality of service that people will talk about, and
that is what will cause the bank to grow.”
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