Security Pacific Bank has drawn considerable media attention with its attempt to recast itself as the bank that is synonymous with both customer service and profitability.
But at least one Security Pacific Corp. business--the Scripps Ranch-based Financial Services System--may have already mastered the art of satisfying both the customer and the bottom line.
The numbers support that contention:
Security Pacific's Financial Services System last year generated $147.2 million--or 38%--of Security Pacific's $385.9 million total net income.
That performance--by a group with $9.6 billion in assets and 5,600 employees--was good enough to match the net income contribution from Security Pacific's banking and real estate business--with 10,000 employees and $17.1 billion in assets.
The Financial Services group's return on assets offers equally powerful proof: Overall, Security Pacific reported a .71% ROA, while the banking and real estate business generated a .87% ROA. The financial services operation generated a stunning 1.58% ROA.
That impressive bottom-line contribution was not accidental: Security Pacific Corp. has been striving to build three separate and distinct businesses that each contribute a third of the corporation's earnings. The financial services operation, with 500 employees in San Diego, began contributing a significant portion of Security Pacific's bottom line in the early 1980s.
However, it has long focused on satisfying customers and the bottom line, according Financial Services System Chairman William F. Ford, who added that "The (bank) might be restructuring, but we're doing the same thing we started out to do in 1974."
What Ford has done is experiment with an ever-changing mix of "high tech and high touch" programs aimed at bolstering sales made by the group of businesses that Security Pacific describes as its "banking-related subsidiaries."
Unlike some of the state's banks, Security Pacific "for years has put a lot more emphasis on . . . its 'non-traditional' banking (businesses)," according to San Francisco-based financial services analyst Dan. B. Williams at Sutro & Co. "And you can't argue with what these guys have done."
Security Pacific's non-traditional banking businesses "have a lot of appeal" when it comes to bolstering earnings, but "there is also more risk," according to Williams. "If you do make a mistake, you could get burned."
The diverse financial services group includes three broad businesses: commercial finance and leasing, a consumer services group, and a venture capital group.
On the commercial side, the group offers financing for leased equipment; asset-based commercial financing, third party automobile finance and leasing, financing to manufactured housing dealers, and real estate lending.
Domestically, its consumer services operation offers home equity loans, revolving lines of credit, consumer loans, credit-related insurance, equity trading and investment products.
Overseas, the group offers consumer and commercial finance products, and certain types of insurance.
Ford has turned operations of the diverse non-bank businesses over to a group of, not surprisingly, non-bankers.
Ford, who left General Electric Credit Corp. in 1974 to manage Security Pacific's Security Pacific Finance Corp., since has been appointed a corporate vice president. He is the only member of Security Pacific Corp.'s five-person Office of the Chairman who hasn't spent his career with Security Pacific.
"You've got to know what's going on in these businesses to succeed," Ford said. "And you're not going to know what's going on unless you've grown up in the business."
Ford described the financial services group as a "very sales-oriented group . . . (with) customer service as the key."
Works Like Charm
In Security Pacific's finance company, that "sales orientation" is honed by a pay-for-performance plan that "works like a charm," according to Ford.
A key to future success at the Financial Services group will be whether the group can successfully combine computer technology and personal service--"high-touch and high tech," according to Ford--in a "financial center" project that recently opened a total of three prototype offices in Florida and Long Island.
Two of the offices are part of the 360-branch Security Pacific Finance Corp. The third is part of the 16-office Security Pacific Brokers Inc. The financial centers are designed to offer a wide range of products, including brokerage services, insurance and automobile loans.
The centers are designed to appeal to "the new generation (that) likes to have these things made easier for them," according to Ford, who added that financial centers could begin popping up around the country within 18 months.