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Banker to the stars

Bram Goldsmith, 89, looks back on almost four decades at the top of City National Bank, which has turned a profit 78 straight quarters

August 05, 2012|E. Scott Reckard

He's the ultimate insider at the ultimate insider's bank, the place Frank Sinatra turned to for ransom money when his son Frank Jr. was kidnapped. Michael Jackson partied in his vault.

Bram Goldsmith, 89, has seen it all at City National Bank. The son-in-law of one of the founders, he took the reins of the "bank to the stars" in the mid-1970s and remains chairman of the parent company to this day.

For The Record
Los Angeles Times Thursday, August 09, 2012 Home Edition Main News Part A Page 4 News Desk 2 inches; 74 words Type of Material: Correction
Bram Goldsmith: An article in the Aug. 5 Business section about longtime City National Bank executive Bram Goldsmith included a photo of him with the Jacksons. The accompanying caption said Michael Jackson was shown displaying his No. 1 single "Shake Your Body." The song, whose full title is "Shake Your Body (Down to the Ground)," was recorded by the Jacksons and peaked at No. 7 on the Billboard Hot 100 chart in May 1979.
For The Record
Los Angeles Times Wednesday, October 10, 2012 Home Edition Main News Part A Page 4 News Desk 1 inches; 39 words Type of Material: Correction
City National Bank: An article in the Aug. 5 Business section about City National Bank misidentified the bank's first chairman as Ben Maltz, the grandfather of City National Chief Executive Russell Goldsmith. The bank's first chairman was Jay Kasler.
For The Record
Los Angeles Times Sunday, October 14, 2012 Home Edition Main News Part A Page 4 News Desk 1 inches; 39 words Type of Material: Correction
City National Bank: An article in the Aug. 5 Business section about City National Bank misidentified the bank's first chairman as Ben Maltz, the grandfather of City National Chief Executive Russell Goldsmith. The bank's first chairman was Jay Kasler.

Launched in 1954, City National's 58-year run stands out in an industry where small banks tend to get gobbled by larger rivals. Rather than sell out, the Goldsmiths built the Beverly Hills community bank into a backer of growth companies across California and a national force in entertainment.

The institution boasts 78 branches in five states and $21 billion in deposits, the most of any bank based in Southern California. It has reported a profit every quarter for the last 191/2 years.

"We've seen soft spots in the economy, but we've been conservative, careful about not getting trapped in a bad situation," Goldsmith says. "We find that if we keep our nose clean and our gunpowder dry we do OK."

Clients include Coffee Bean & Tea Leaf, the Los Angeles Galaxy, broadcast legend Vin Scully and celebrity chef Wolfgang Puck. City National bankrolls Hollywood producers, country-western pickers in Nashville and hip-hop artists in Atlanta. It directly manages more than $32 billion in investments for wealthy individuals and institutions.

Looking back at the bank's history, Goldsmith shares anecdotes that erase the years.

There's the oft-told tale of how his predecessor as bank chairman, Alfred S. Hart, produced $240,000 in cash on short notice in 1963 to ransom Frank Sinatra Jr., abducted from Harrah's Lake Tahoe.

Sinatra repaid that and other favors from Hart in 1975 by performing at a benefit that raised $3.5 million from hundreds of Hollywood A-listers to help build the Alfred and Viola Hart Tower at Cedars-Sinai Medical Center.

Goldsmith, of course, was there. He remembers the crooner thanking Al Hart at the event: "I owe him and City National Bank everything, and that's why I'm here, to say thank you very much."

With such an endorsement, little wonder that more than a quarter of City National's loans are still made to the entertainment industry. The bank helps finance about 50 films a year and, by its count, is providing banking services to 14 of the 28 current shows on Broadway, including the smashes "Once" and "The Book of Mormon."

One of the biggest factors in the bank's success is its kid-gloves service to modern Hollywood's behind-the-scenes power structure: the managers, lawyers and accountants who handle business and investments for actors, directors, musicians, athletes.

When a producer wanted a stack of yen delivered to the airport or the Jackson 5's manager needed a party venue, City National was proud to oblige.

"That's why we've grown so much," Goldsmith says. "We've always done a good job for them."

The Goldsmiths rank among Southern California's philanthropic as well as business elite. The names of Bram and wife Elaine Goldsmith are on the walls of art colleges and performing arts centers, hospital research centers and endowed chairs at the L.A. Philharmonic.

And the bank has thrived.

Although stung by losses on construction loans and commercial mortgages during the recent recession, City National avoided the subprime home loan and trading debacles that flattened larger rivals. In a burst of acquisitions, branch openings and new lending since 2008, assets have increased 50%, with profit growing from $51 million in 2009 to $172 million in 2011 and trending higher this year.

The stock is still down 27% from five years ago. But that beats a 33% decline in a national index of regional bank stocks, and investors so far seem content to let the family-controlled bank (the Goldsmiths' stake is nearly 15%) determine its own course.

"These guys were in a position of strength coming out of the downturn," says RBC Capital Markets analyst Joe Morford, who has followed City National for 20 years. "So they are in a position to gain market share."

For the last 17 years, the main hand on the tiller has been that of Russell Goldsmith, Bram's 62-year-old son, who is chairman and chief executive of the bank and CEO of parent City National Corp.

Russell Goldsmith, a former entertainment executive with Harvard undergraduate and law degrees, offers polished guest commentaries on CNBC and explains to a visitor how his clientele includes the 5% as well as the 1%.

"If you go to our branch downstairs and you have $500,000 instead of $200 million we have a product set there [for you]," he says. "That's part of what we've done -- try to help clients of every level have the ability to build their wealth with City National."

City National's founders started as outsiders who clawed out fortunes in various down-to-earth enterprises during the rough-and-tumble of Los Angeles' noir period.

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