Magazine article American Banker

Pacific Bank's Downsizer Waging an Uphill Battle

Magazine article American Banker

Pacific Bank's Downsizer Waging an Uphill Battle

Article excerpt

As the veteran banker brought in to run San Francisco's troubled Pacific Bank, Leonard Busse has to make some tough decisions.

Like many Golden State community banks, $643 million-asset Pacific Bank has been limping under the weight of nonperformers. Nonperforming loans equaled 16% of all loans as of Dec. 31.

Mr. Busse, who became chief operating officer on June 1, is working to clean up the bad assets, trim expenses, and grow. But some say the odds are against him.

"If I was of a betting mind, I'd take even odds that this bank will go away," said Greg Madding, investment banker at Hoefer & Arnett.

But Mr. Busse is not shrinking from doing whatever it takes to straighten out the bank. Pointing out that the members of Pacific's management team, including the company's chairman, chief financial officer, and corporate counsel are new, Mr. Busse, 54, says: "There are no sacred cows."

Among his first tasks will be whittling away at the bank's noninterest expenses, which at year end accounted for more than 5% of average assets, according to Sheshunoff Information Services. Branches will be consolidated and the 380-member staff will be reduced by 25%.

"One of the problems today is that we are a $1 billion organization that is now at $600 million," said the executive.

Mr. Busse, formerly an executive at Continental Illinois National Bank, is not unfamiliar with the job of stringent cost cutting. From 1985 to 1988, Mr. …

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