Reese Davies of San Luis Obispo has spent more than 40 years as a banker in the county. Davies left posts at Wells Fargo and Pacific Capital because he no longer felt at home in what he calls ‘a big bank culture.’
As the incoming president of San Luis Obispo’s Founders Community Bank, Reese Davies plans on doing what he does best: fueling the growth of a local community bank.
Davies, 66, has been a banker in the county for more than 40 years. A San Luis Obispo native, his first banking manager job was at First Central Coast Bank’s Los Osos branch until Wells Fargo bought out the local operation in 1979. Davies stayed on with Wells Fargo for five months, thinking it was the best way to advance his career.
But he realized he was stifled by the larger bank’s bureaucracy, and he left Wells Fargo in 1980 to help open a new community bank, First Bank of San Luis Obispo. For the next 25 years, Davies said he thrived in the community bank environment.
Under his leadership, First Bank also thrived. Starting with $1.75 million in capital, the bank grew to about $300 million in assets. In 2005, it was bought by Santa Barbara-based Pacific Capital Bancorp.
Davies owned more than 48,000 shares amounting to 3.8 percent of the stock at the time of the buyout, according to a First Bancshares Inc. proxy statement. With shares valued at $48 per share, Davies was able to reap more than $2.3 million in the deal, and he stayed on under the new ownership for two and a half years to help with the transition to Pacific Capital’s leadership.
But he said he was in the same position as when Wells Fargo acquired First Central Coast because he no longer felt at home in what he called “a big bank culture.”
Davies recently left his position as president and chief executive officer at First Bank to become Founders’ president. Tom Sherman, who was president and CEO, will continue his position as CEO. Davies first official day will be Monday. Founders started in 2005 with $11 million in capital; it now has assets of about $83.4 million.
Davies spoke to The Tribune about his move to Founders and what it means to him and local banking.
Q: Why did you choose to move to Founders Community Bank?
A: The time was right. I had signed a contract with Pacific Capital when it bought First Bank to help with the changeover. That contract has now ended, and it was by mutual agreement that I move on. At the new First Bank, I had become more of an implementer than a decision-maker.
Q:Most people retire at 65. Why have you decided to stay on in banking?
A: I thought about retiring, but then I realized there was no reason to quit if I love what I do. I have what I characterize as an incredibly strong passion for customer service. I enjoy people reminding me that I made their first loan 25 years ago. I have a lot of relationships with good customers that I’d like to continue with Founders. As long as I’m healthy and keep enjoy what I’m doing, I will have no plans to retire.
Q: What are the biggest two challenges facing Founders?
A: All the local banks are competing to get core deposits. So, I’d say my first challenge is competing for those deposits. Without those deposits you can’t lend. Pricing between what you pay for deposits and what you charge for loans — that’s the net interest margin, and that’s what the banks use for their operating expenses. Every opportunity to gather a deposit changes with each customer. The second important challenge will be to watch the credit quality in an economy that is going south. Loans that looked good last year won’t necessarily look good today.
Q: What type of customers is Founders targeting?
A: The bank is going to focus more on retail customers, small-business operations and individuals such as small-business owners, lawyers and doctors. We also offer consumer services, such as debt consolidation, and loans for home improvement, college and cars.
Q: What are your plans as Founders’ new president?
A: We’re going to grow the bank with deposit increases. While I won’t solicit First Bank customers, I think there will be customers who will follow me. At Founders, there will be hands-on decision-making, quick responses and banking as uncomplicated as the law allows.
Q: There has been some talk that San Luis Obispo County has too many banks. How do you answer that?
A: All I can say is that competition makes for better banks. Customers benefit with having more choices such as the pricing of loans and service levels. All banks essentially offer the same services: checking, savings, loans, etc. The difference is how those services are delivered to the customer and the cost of them.
Q: Is Founders affected by the mortgage crisis?
A: Banking is a heavily regulated industry, and we’ve been luckily untouched directly by the subprime mortgage business. That said, there’s a ripple effect. If things don’t turn around, any bank with customers who derive their income or cash flow from real estate will be affected. Customers might not be able to service debt on loans. There may be foreclosures, write-downs and losses.Now, if it’s the beginning of a recession, everybody — not just the real estate industry — is going to be affected. People will have a hard time with their money. Still, I’m keeping my fingers crossed. San Luis Obispo is still an incredibly nice place to live, and there are some tremendous buying opportunities in real estate.
Q: A lot is being made of Internet banking. Do you foresee running a bank without bricks and mortar?
A: For me, being part of a bank with bricks and mortar is still very much part of how I do business. When someone comes in for a loan, I need to see that person to get a feel for that person’s integrity. I’ve gotten to be a very good judge of character when I converse with someone face to face. I depend on the personal touch and becoming totally electronic would literally remove that. It certainly wouldn’t be an environment I would be able to work in. And I don’t think customers want that either.
Print
E-Mail
