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The People's Choice?

Local Bank Has Big Plans to Lure Weary Customers


One of Los Angeles' oldest independent financial institutions hopes to become one of its more well-known banks, taking advantage of its hometown status to lure those Southern California customers increasingly frustrated with the out-of-town giants.

The 111-year-old People's Bank of California, armed with cash from its initial public offering nine days ago, plans an aggressive expansion that includes an advertising campaign to gain new customers, more bank branches and possible acquisitions. It seeks to be a more high-profile bank in Los Angeles, Ventura and Orange counties.

Executives believe its relatively tiny $2.2 billion in assets could grow to $3.6 billion by the end of the year. People's has 40 ATMs and 19 branches in Southern California. Although home mortgage lending makes up more than two-thirds of its business, People's will be expanding its small-business lending and retail customer base.

"We're transitioning from savings bank to commercial bank," said Rudolf Guenzel, 57, the bank's chief executive officer, who joined the company in 1995 during a reorganization that brought him from BancFlorida Financial Corp. "We can offer anything any other bank does."

People's was called Southern California Federal Savings and Loan Assn. when it was formed in 1887 by a group of men who worked for Southern Pacific Railroad. Early meetings were held in a rented hall behind a tailor's shop near the railroad yards before the founders opened the first branch office in downtown Los Angeles. The first loan was a home loan.

In recent years, the bank has changed ownership several times.

In 1985, it was placed into receivership, because of loan losses, by the Federal Savings and Loan Insurance Corp. In 1987, a group of investors led by William E. Simon, a secretary of the Treasury under presidents Nixon and Ford, bought the company. Original investors included a trust run by one of the largest public landowners in Hawaii.

PBOC Holding Co., the bank's holding company, completed its initial public offering of 12.7 million shares on May 13 at $13.75 a share through underwriters Sandler O'Neill & Co. With the sale of shares to public investors, the original investors control only about 33%, the company said.

The company raised about $200 million from its offering, most of which was used to pay down debt and buy back shares from original investors. With the remaining $60 million, People's can finance its expansion or future acquisitions.

With the record pace and size of mergers sweeping the financial industry, People's Bank hopes to attract a growing number of people frustrated by mega-mergers such as the $60-billion planned deal between NationsBank Corp. and BankAmerica Corp. that would create America's largest bank.

"We send thank-you letters to BofA and NationsBank," Guenzel said from his office in a mid-Wilshire high-rise near the Los Angeles County Museum of Art.

People's is already targeting customers of Coast Savings with a direct mailing to areas around the Coast branches. Coast has been bought twice in just the last year, most recently by Washington Mutual Inc. in its purchase of Home Savings.

PBOC shares closed Thursday at $14.06 on Nasdaq.

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