Developer Lights Candle Instead of Cursing Dark Real Estate by Shelly Garcia Silagi Development and Management Co.’s newest project, a 93,000-square-foot office building in Agoura Hills, is open for business, and the timing could not be worse. Vacancies are up, demand is down and Katell Properties earlier this year completed 67,000 square feet of offices in Agoura which the company has yet to lease. But Moshe Silagi, president of the Thousand Oaks company that bears his name, isn’t breaking a sweat. Not that I expected to hear much panic when I called. Developers are a notoriously even-keeled bunch, accustomed as they are to the ups and downs of the real estate market, and Silagi is a veteran. I did, however, think a little bit of the ‘things are tough’ mantra was in order. Instead I got a systematic breakdown of the nuances of the current real estate market, along with a little lesson in strategic thinking. First Silagi makes the usual points about the fundamentally sound economy and the fact that the market is not overbuilt as it was during the recession of the 1990s. What space is available, Silagi says, has crept up in price so that his new development is more or less competitive with existing buildings. “We’re asking $2.20 (a square foot) and making deals between $2.10 and $2.15,” he said, “which is normal. Everybody wants a break.” But Silagi’s real ace in the hole is the design of his building, suited for requirements that range anywhere from 500 square feet up to 14,000. The Katell development, completed in the Agoura Hills Business Park early last spring, can’t accommodate such small tenants, Silagi said, which means Katell can’t take advantage of many of the opportunities out there. Silagi even switched leasing agents, substituting Westcord Commercial Real Estate Services for the larger CB Richard Ellis he had worked with, because Westcord’s contacts are better within that smaller tenant community. “We think that CB did a decent job, mostly for large-scale and corporate America tenants, and we felt by bringing in a new company with fresh blood, we may have a better result,” Silagi said. Silagi’s Agoura Hills Gateway is still a little behind schedule. Normally, Silagi says he’s about 35 percent to 40 percent leased upon completion he notes that smaller tenants never pre-lease before most of the construction is completed but he has managed to lease about 10 percent of the space with deals with Wood Ranch Barbecue, a small engineering firm and a small satellite office of a bank. The largest of those deals is 3,000 square feet. I wondered how many of those deals Silagi could expect to do in a market that everyone agrees is ice cold, but Silagi wasn’t having it. He tells me he’s just made three deals for a property he owns in Covina, one deal in Pomona and two in Westlake Village this month. He’s just gotten approval for two buildings in Riverside, and he’s already in negotiations on a 17,000-square-foot deal and another for 12,000 square feet. “You have to work harder,” he said. “You have to be more creative. You didn’t have to be smart three years ago to be a broker. Today you have to be smart.” The problem, he says, is that brokers think what happened in 1999 and 2000 was the normal course of business. “That was wonderland,” he says. And while he concedes leasing has slowed, he insists the market is still strong. “In sales it’s the best I remember it in the last 17 years,” Silagi said. “You never got such a high cap rate, and there are no fire sales and there are no bankruptcies. So if everything is so bad, why are there no bankruptcies?” Even if, as Silagi believes, the current leasing climate is likely to last through 2003 and perhaps into 2004, so what? The interest reserves he allocated were based on rates of 9 percent to 10 percent. They are now half that, which doubles the time he has to lease his new building. And, based on land and construction costs, he said, “I need 50 percent (of the building leased) to break even. “I’m not losing sleep.” Tejon City Planned The developers of the Tejon Ranch residential community have revised their plans to include a master-planned community phased in over a 25-year period. The developers, Tejon Ranch Co., Pardee Homes, Lewis Investment Co. and Standard Pacific Homes, have formed a joint venture partnership called Centennial Founders for the project, located at the junction of Interstate 5 and Highway 138 at the border of Kern County. The developers expect it will take two to three years to complete their plans for the development, which will be built on 6,000 acres of the 11,700-acre site. More than 5,500 acres will be devoted to open space. Plans include 23,000 homes, a business district, schools, libraries, retail and entertainment and recreation centers and medical facilities, built out over 25 years. Centennial expects the first home occupancies to take place in 2007. The company says the development will generate 30,000 jobs. Centennial initially planned to construct a 4,000-acre housing development on the site. Woodland Hills Sale The Woodland Hills headquarters of Panavision were sold to a private investor group for an estimated $14 million. Panavision will remain as the tenant in the 152,000-square-foot building at 6219 DeSoto Ave. under its nine-year lease. Bob Safai, a broker with Madison Partners, represented the buyer, 6219 DeSoto Associates, and the seller, Trizec Properties Inc., in the deal. ELabor Downsizes After completing the sale of one of its product lines, eLabor.com has reduced its headquarters office space by about 10,000 square feet. The Camarillo-based developer of labor management and recruiting software opted for a 30,000-square-foot space at Mission Oaks Technology Center at 5153 Camino Ruiz. The five-year lease is valued at somewhat more than $3.2 million. Bryan Lewitt and Matthew Miller, brokers with CRESA Partners, represented eLabor. The landlord, Kilroy Realty LP, was represented by David Garcia at Kilroy. Senior reporter Shelly Garcia can be reached at (818) 676-1750, ext. 14 or by e-mail at [email protected].

Executive Summary Naturally, there are few surprises in the ranking of cities in the Greater San Fernando Valley according to population. Los Angeles is at the top; and even if secession is successful, whatever city takes its place will certainly dwarf the second city on the list, Glendale. Glendale is the third largest city in L.A. County (after L.A. and Long Beach) and its chances of ever approaching either – or a new Valley city – in population size are virtually non-existent. However, there have been some changes. Given mid-census adjustments, growth in Palmdale (which has added about 7,000 residents since the 2000 Census) has moved it ahead of Thousand Oaks. While there are dozens of cities in Los Angeles County, the largest do remain in the San Fernando Valley with the top eight all having over 100,000. The Pacesetter LOS ANGELES For better or worse, and for the moment, the city of Los Angeles is the dominant player in the San Fernando Valley when it comes to comparing the population of cities. Of the somewhere close to 2 million people who live in the area, 1,698,435 live in that part of the Valley currently defined as Los Angeles. By the time this list is published again, a lot of things could change. There may very well no longer be a Los Angeles in the Valley and a so far unnamed city could take it place. Voters throughout the city will decide in early November the future of the Valley. In order for secession to become a reality, a majority of voters in both the Valley and the city as a whole must approve it. Even then, any potential new city that takes the place of L.A. is sure to play a major regional role. Even with the greatly reduced population of approximately 1.7 million, instead of L.A.’s current 3.7 million, a new Valley city will dwarf Glendale, the second largest city in the area with almost 200,000. While the San Fernando Valley has been a part of Los Angeles since early in the 20th century, much of its demographic history is quite recent.

The San Fernando Valley’s Most Outstanding Bankers Scott Aney Senior Vice President California Federal Bank, Sherman Oaks Bita Ardalan Senior Vice President Union Bank of California, Woodland Hills Brandon Bogeaus Regional Vice President and Manager Mercantile National Bank, Encino Darrell Brown Senior Vice President and Regional Manager Wells Fargo Bank, Canoga Park Jason Brown Vice President Comerica Bank, Sherman Oaks Karen Brown Senior Vice President U.S. Bank, Encino Bruce English President Bay View Financial Corp., Encino Jack Feldman President and CEO First Commerce Bank, Encino Victor Gonzalez Financial Services Executive Countrywide Bank, Northridge Tamara Gurney President and CEO Mission Valley Bank, Sun Valley Jeri Harman Principal and Managing Director American Capital Strategies, Woodland Hills Fred Lionetti Senior Vice President Continental Business Credit Inc., Woodland Hills John Marquis Vice President California Federal Bank, Sherman Oaks Scott A. McAfee President and CEO WMC Mortgage Corp. Woodland Hills Craig Miller Director Mosaic Capital & Mosaic Capital Securities, Sherman Oaks Craig Miller Director Mosaic Capital & Mosaic Capital Securities, Sherman Oaks Christopher D. Myers Regional Vice President Mellon First Business Bank, Encino Richard Pankow Senior Vice President Comerica Bank, Sherman Oaks John Roberts Senior Vice President Fleet Capital Corp., Sherman Oaks Carl Schatz Chairman Encino State Bank John Sehrer Vice President, Commercial Banking Group Wells Fargo Bank, Woodland Hills Richard C. Taylor President and CEO First State Bank of California, Granada Hills Mark Turk Senior Vice President Silicon Valley Bank, Westlake Village Timothy Turner Senior Vice President and Regional Manager LaSalle Business Credit, Glendale Paul Whitney Senior Vice President Wells Fargo Bank, Woodland Hills

Local Firms Benefit From Online Presence in Industry By JACQUELINE FOX Staff Reporter When the ATM first hit the banking scene in the early 1970s, consumers were skeptical about exchanging the personalized service they’d come to expect from the bank teller for a visit to a machine. But the technology marked the first move by the financial services industry to cut the operational costs of serving bank customers. It also provided those same customers with something they have since grown to demand: options. For years and up to the present day, the San Fernando Valley has been a focus of those efforts to take banking online. Among the local players are Countrywide Credit Industries Inc., one of the nation’s largest home mortgage lenders; WMC Mortgage Corp., which shut down almost three dozen brick-and-mortar branches three years ago to go online full time; and Digital Insight Corp., which hosts Internet banking services for more than 1,000 financial institutions. Today, the ATM card threatens to replace the checkbook and automated tellers dot every corner of the urban landscape, from sidewalks to supermarkets. But with the move of the Internet into the mainstream, consumers have grown to demand even more options, and just as banks pushed their customers to embrace the idea of getting cash off the street, they are now trying to steer them someplace else: to their computers. Welcome to online banking, or as it was called when it surfaced about seven years ago, “armchair banking,” where it’s estimated roughly 30 million consumers log on each day to transfer funds, pay bills, balance their checkbooks, apply for loans, set up college piggy banks for their kids or even get investment advice. “Right now, we gauge that roughly 30 million people are registered for online banking, and about half of them are what we call active users,” said Paul Jamieson, president and director of analytics for Colorado-based FiSite Research, which tracks online financial services firms. According to Jupiter Media Metrix, roughly two-thirds of all households have Internet access; of that number, about 25 percent were online in 2002. By 2005, that number is expected to jump to about 60 percent. Although the number of registered users is growing daily, banks face a challenge in both getting customers online and enticing them to come back again. Big players like Wells Fargo and Bank of America have capitalized on the technology and remain key players in the online market. But online banking is also serving smaller, regional banks as well, despite initial fears that the Internet would mean the death of the neighborhood bank. Roughly 50 of the 1,000 customers at Mission Valley Bank, which opened last year in Sun Valley, are using the service, according to bank senior vice president Marianne Sederland. She said they’re primarily business clients. “They love the service because it helps them manage their accounts more efficiently,” she said. “And, as accounts are maturing, more and more are logging on.” Sederland said online products do serve to keep costs down for both the bank and its clients, but in no way would it ever replace the branch. “We aren’t going anywhere, no matter how many of our customers log on,” she said. Mortgage lenders have also jumped on the bandwagon, and are profiting as a result. According to Economy.Com, Americans took out about $160 billion in online mortgages in 2001, roughly 8 percent of the market. At the head of the game is Calabasas-based Countrywide, which reported $17 billion in loan funding for July, with close to 50 percent of that coming through online channels. In fact, consumers shopping for mortgages took to online financial services early on, prompting Woodland Hills-based WMC Mortgage Corp. to do the unthinkable in June of 1999. That’s when the company shut down all 33 of its brick and mortar branches and went completely online. It was a risky move, but worth it. WMC posted $112 million in loans in July and kicked off August with anticipated sales of $130 million. “Clearly the idea behind online services is to reduce overall operating expenses, and it’s starting to bear fruit across all sectors of the financial services industry,” said Jamieson. Consumers who’ve been reluctant to bank online often say the sites are “too complicated or too overwhelming or loaded with data,” according to Jamieson. As a result, the industry has been in constant upgrade mode since its inception. Vendors of the technology are scrambling to keep pace with the fruits of their own labor. One of those leading that segment of the industry is Digital Insight, also based in Calabasas, which hosts Internet banking sites for more than 1,000 smaller banks and credit unions. The company was recently ranked the top small financial institution Internet banking vendor in the country by Celent Communications, a New York-based Internet financial services research firm. “Digital focuses on the most important element of online banking,” said Alenka Grealish, senior analyst with Celent based in San Francisco. “That’s customer feedback. They really listen to customer feedback throughout the process, from sales to implementation. And, while they have a strong market position, they don’t rest on their tech laurels. They continue to invest in research and development to design new platforms to keep up with demands.” Jamieson agreed. “Digital Insight has done a great job of serving community banks in an inexpensive way, but offers some of the same sophistication as the other larger vendors do for the big banks,” he said. According to Susan Steele, vice president of sales for Digital, the company does about 40 upgrades each year. What will the technology look like five years from now? “No question, in five years what you will be able to do easily is not just work with your primary institution, but you’ll be able to go online and virtually transfer money and access multi-accounts and various institutions,” she said. “The big picture is having more control. Within Internet banking we see the future for people to plot their own charts and graphs with their real income and real money and figure out where they want to put it all.” But as good as that technology gets, converting in-store customers to the Web remains an ongoing challenge. Consumers get a little jittery when it comes to putting financial information on the Web, so encryption programs tailored for online banking sites will also be evolving. “In addition to making the technology easier to use, what’s also holding back consumers now is concern over the safety of their personal information and their privacy,” Jamieson said. “But I think it’s fairly safe. Hacking is a reality, but over the seven or eight years since online banking surfaced, we haven’t had much of a problem. The United States has a very long history of securing data.” What about the branches? “We’ll always need them,” Jamieson said. “Some still need to know that if their computer blows up they can go in and talk to someone, face to face. “On the other hand, they will also need to evolve.”

25 Bankers Who Keep the Valley’s Capital Coming Scott Aney Senior Vice President California Federal Bank, Sherman Oaks A 22-year banking veteran Began his career with Bank of America as a management trainee, working his way up to head middle-market commercial banking and marketing in the West Los Angeles area where he helped build the bank’s commercial lending business Joined CalFed in 1999 where he led the bank’s expansion of its commercial lending unit through scores of loans and finance agreements with small and medium-sized firms Karen Nissim, controller for Van Nuys-based Regency Lighting Inc., said Aney has a knack for problem-solving and creating opportunities for financing packages. “No other banker in the Valley has the combination of solid judgement and creativity that we always get when we deal with Scott,” she said. – Carlos Martinez _________________________________________________ Bita Ardalan Senior Vice President Union Bank of California, Woodland Hills Worked in the banking industry for the last 19 years With Union Bank for more than 16 years, 14 of them at Union Bank’s San Fernando Valley branch Known in the industry as a creative, aggressive banker whose team comes up with creative solutions for lending programs and others Serves on the board of the Los Angeles Association for Corporate Growth and has just been asked to serve on the Business Advisory Council at California Lutheran University Originally from Iran. – Jacqueline Fox _________________________________________________ Brandon Bogeaus Regional Vice President and Manager Mercantile National Bank, Encino Twelve-year banking veteran, starting in operations and moving to branch manager before assuming current duties Opened first San Fernando Valley branch of Mercantile National Bank a year ago Shaped bank’s business specializing in entertainment, health care and community-based non-profits to reflect Valley economy Known for steadfast attention to client service Monitors each account personally and contacts clients directly to alert them if it looks like they may overdraw their account Has also been known to personally pay overdraws for those with good banking relationships Installed a paging system that automatically contacts him if a client calls after hours; clients who call in the evening expecting Bogeaus to return the call in the morning are often surprised to get a call back the same night “One time when I needed $5,000 (after hours) he actually met me at the restaurant after work and gave me my withdrawal,” said Larry Sherman, president and CEO, Nations Surgery Centers in Westlake Village, who took his account to Mercantile when Bogeaus moved there from his previous position at First Professional Bank. “Without that help we might not have been able to grow as fast,” Sherman said. “If he trusts you, you’ve got a phenomenal person there you can bank with.” – Shelly Garcia _________________________________________________ Darrell Brown Senior Vice President and Regional Manager Wells Fargo Bank, Canoga Park Thirty years of experience in financial services Joined Wells Fargo 10 years ago and has held current position since 1999 Oversees 44 banking units in five markets with $3.5 billion in deposits Manages P & L; center with 1,200 team members providing retail banking, commercial lending investment and insurance services Responsible for building bank’s presence in Valley markets and tailoring services to specific needs of individual markets Oversaw development of mortgage program that takes into account unverified income Partnered with Mexican Consulate to develop an alternate form of identification enabling those without driver’s licenses to establish bank accounts Sits on boards for numerous local groups including Valley Family Center, Urban Financial Services Coalition and Alkebu-Ian Youth Center. – Shelly Garcia _________________________________________________ Jason Brown Vice President Comerica Bank, Sherman Oaks A seven-year banking veteran Worked with Manufacturers Bank in Australia before arriving in the U.S., began working with Comerica Bank in the San Fernando Valley six years ago Known for his “hands-on” approach to business and asks his clients to call his cell phone anytime with any concerns Has closed a number of major deals, including recent $20 million loan package for Goleta-based shoe manufacturer Deckers Outdoor Corp. and $16 million financing for Calabasas-based National Technical Systems Born in Sydney, Australia. – Carlos Martinez _________________________________________________ Karen Brown Senior Vice President U.S. Bank, Encino Got into the industry 22 years ago as a collateral analyst for Barkleys Business Credit, now Fleet Boston Group in Sherman Oaks Went on to serve as loan team manager for City National Bank for five years and then at California United Bank in Encino as a team manager for 10 years With U.S. Bank the last three and a half years As a cancer survivor, has put her experience into efforts to assist organizations such as the City of Hope and served as a captain in the Revlon Run/Walk for Breast Cancer. – Jacqueline Fox _________________________________________________ Bruce English President Bay View Financial Corp., Encino Twenty-two-year commercial lending and finance veteran joined Bay View in 1997 Started up the asset-lending division and Southern California headquarters in Encino In five years has taken the lending division from assets of $24 million to $110 million in loans Developed strategy to compete against larger institutions by approximating the workings of local community banks, using a streamlined approval process and personal relationships with borrowers Colleagues praise English’s asset-based lending expertise. “He can make loans to companies banks wouldn’t lend to because he has special skills analyzing the collateral,” said John Roberts, senior vice president and marketing manager at Fleet Capital, who has worked with English. – Shelly Garcia _________________________________________________ Jack Feldman President and CEO First Commerce Bank, Encino Twenty-six years in banking First Commerce is the fourth bank he has been the CEO of After 16 years in the San Fernando Valley, Feldman left in 1997 when his Bank of Los Angeles was sold; returned in 2000 when his then-struggling Brentwood Bank of California changed its name to First Commerce Bank and moved into former Bank of Los Angeles building “Jack is the kind of guy that you want to do business with. He just knows how to treat customers,” said Martin M. Cooper, president of Woodland Hills-based Cooper Communications. – Carlos Martinez _________________________________________________ Victor Gonzalez Financial Services Executive Countrywide Bank, Northridge Formerly a financial advisor with Morgan Stanley Dean Witter At Countrywide since February, a bank that has been a subsidiary of Countrywide Credit Industries for less than a year Countrywide Bank executive vice president Kathy Ross said Gonzalez has deep roots in the community and, “as a result, he has brought in millions of dollars in new deposits in the very short time he’s been with us. And believe me, it’s harder to get people to give you money than to get them to take it.” Formerly a supervisor of the Santa Clarita Sports Complex, currently an active member of the Northridge/Porter Ranch Chamber of Commerce and volunteer with the Newhall/Santa Clarita Community Center. – Michael Hart _________________________________________________ Tamara Gurney President and CEO Mission Valley Bank, Sun Valley Led an investor group to establish Mission Valley Bank in 2001 in Sun Valley After one full year in operation, the bank has deposits of $40 million and assets of $45 million Gurney has led the bank’s community involvement through support of activities such as the San Fernando Valley Fair, participation in area service groups and a series of bank-sponsored seminars to provide education about banking to the Northeast Valley Began her career with a 20-year stint at American Pacific State Bank in Sun Valley Rose through American Pacific’s ranks to become its executive vice president and chief operating officer before it was acquired by City National Bank in 1999. – Carlos Martinez _________________________________________________ Jeri Harman Principal and Managing Director American Capital Strategies, Woodland Hills Twenty years experience in financing with more than $1 billion in total transactions Spent more than 11 years in various positions at Prudential Insurance Company of America President of the Association of Corporate Growth – Los Angeles and director of MACC Private Equities Inc., Sunvest Industries Inc., ThreeSixty Sourcing Ltd. and ACG International Known for meticulousness and ability to solve problems equitably Attorney Tom Stromberg said, “Her experience permits her to look at a company and see its true value. She’s able to understand things quickly while other people take longer and may arrive at wrong conclusions.” – Carlos Martinez _________________________________________________ Fred Lionetti Senior Vice President Continental Business Credit Inc., Woodland Hills Known in the banking community as the “undisputed dean of commercial finance lenders” Director of the Commercial Finance Conference of California, which, as past president and chairman, he helped expand from a membership of about 20 to more than 100 Trained on the East Coast and has served the banking community for more than 50 years … Active fundraiser for the City of Hope, Juvenile Diabetes Foundation, which has also honored him as “Father of the Year,” and Viking Charities, which raises funds for inner city youth Loves to tell jokes and says he believes humor is the key to longevity and happiness. – Jacqueline Fox _________________________________________________ Scott A. McAfee President and CEO WMC Mortgage Corp. Woodland Hills Joined WMC in 1997 after 20 years experience in the banking industry Reengineered the company and, after a $20 million investment in online lending technology, created one of the only mortgage lending businesses operating exclusively on the Internet Built WMC’s loan production to $644 million in the first quarter of 2002 from $160 million in the first quarter of 2001 WMC was recently ranked the eighth largest non-prime mortgage company in the U.S. by Thomson Financial In 1992, McAfee was named to American Banker magazine’s Top 40 Under 40 list He currently serves on the board of the Mortgage Bankers Association of America. – Shelly Garcia _________________________________________________ John Marquis Vice President California Federal Bank, Sherman Oaks During 25 years in banking, has held positions ranging from marketing and branch administration to senior management in commercial lending Served as branch administrator for TransWorld Bank, headquartered in Sherman Oaks, prior to its acquisition by CalFed Received an MBA from USC and teaches finance and economics at the University of Phoenix Served as chairman of the Valley Community Clinic, Pacific Lodge Home for Boys and the Valley Economic Development Center’s loan committee Also a board member of the Economic Alliance of the San Fernando Valley, Valley Economic Development Center and the Olive View-UCLA Medical Center Foundation. – Jacqueline Fox _________________________________________________ Craig Miller Director Mosaic Capital & Mosaic Capital Securities, Sherman Oaks Has completed transactions valued at more than $1.5 billion as a commercial banker and real estate entrepreneur Investment banker who provides merger and acquisitions advice and financing and valuation services for rapidly growing and distressed middle-market companies Wells Fargo’s John Sehrer said Craig Miller is “the predominant force at the best investment banking group in the Valley” Began commercial banking career with Union Bank in 1976, eventually becoming senior vice president in 1986 and regional manager of the bank’s Orange County office, Union’s largest real estate group In 1987, became executive vice president and CFO of Told Corp., an industrial development firm where he negotiated and managed financing, acquisitions, leasing and management of industrial properties Particular industry expertise in electronic distribution and components, telecommunications, aircraft parts, injection molding and food distribution. – Michael Hart _________________________________________________ Barry Morgenstern Managing Director Glick Morgenstern Capital Group, LLC, Encino Began in the commercial finance business at Foothill Capital in 1974 Was involved in corporate financing for companies getting in on the early stages of the telecommunications industry in the 1980s, specifically cable and long-distance retailers Formed Glick Morgenstern with partner Dan Glick in 1986 to represent middle-market companies in need of asset-based financing Serves on the board of the Family and Child Guidance Center in Northridge, which provides mental health services to criminally abused children and at-risk youth. – Jacqueline Fox _________________________________________________ Christopher D. Myers Regional Vice President Mellon First Business Bank, Encino Joined Mellon in 1998 after management team in the Valley left to form a new bank Rebuilt staff and focused efforts on mid-sized companies seeking credit between $1 million and $15 million Increased assets by more than $75 million and doubled profits Myers’ success as a rainmaker for the bank is due in part to his focus on mid-sized companies that are often overlooked by larger banks and his ability to understand and react to the unique banking needs of different types of businesses, colleagues say “What really sold us on Mellon First Business was that Chris seemed to quickly grasp the important points to our business,” said Ken Menager, controller for Bernards Bros. Inc., a San Fernando-based construction contractor Myers has also worked at Sanwa Bank and First Interstate Bank of California during his nearly two decade-long career. He is active in Professionals Networking Group, Junior Achievement and Harvard Club of Southern California, among other affiliations. – Shelly Garcia _________________________________________________ Richard Pankow Senior Vice President Comerica Bank, Sherman Oaks Since his arrival at Comerica in 1999, the Sherman Oaks commercial lending unit has doubled its portfolio size and the branch has tripled its deposit base Helped consolidate Comerica’s operations at newly-acquired Imperial Bank branches Worked 24 years at Bank of America where he established the bank’s auto dealer financing group in 1979 and its Small Business Center in 1988 Headed Bank of America’s first and only commercial gold lending deal with Burbank-based jewelry maker OroAmerica Inc. in 1996 Rickey Gelb, general partner of Gelb Enterprises in Encino, said Pankow’s success comes from his dedication and integrity. “He’s a straight shooter. He tells you everything from the beginning and at the 11th hour nothing changes. You don’t get surprises from him,” Gelb said. – Carlos Martinez _________________________________________________ John Roberts Senior Vice President Fleet Capital Corp., Sherman Oaks Joined Fleet Capital in 1988 Responsible for providing more than $2.5 billion in committed lines of credit to more than 60 companies Focused for the last 13 years on business development Incorporated several new products including the “senior stretch” program, which lends on trade names and other non-traditional assets Member of fundraising committees for the American Diabetes Association, the Make-a-Wish Foundation, KCET Public Television, Aids Walk LA and the Juvenile Diabetes Research Foundation. – Jacqueline Fox _________________________________________________ Carl Schatz Chairman Encino State Bank Began his banking career in 1938 at the age of 18 Since then, the octogenarian has founded a total of four banks. The first, Bank of Encino, was sold to United California Bank in 1961, in a deal that increased the stock value to shareholders by 50 percent …When CEO of his second startup, Independence Bank became the first bank to raise deposits from .5 percent to 1 percent After selling Independence Bank to a group of Asian investors, Schatz founded in 1986 his second institution called the Bank of Encino. The bank was later merged with Western Bank In 1997, Schatz raised $5 million from investors to found Encino State Bank Built bank to assets of $129 million as of June 2001. – Shelly Garcia _________________________________________________ John Sehrer Vice President, Commercial Banking Group Wells Fargo Bank, Woodland Hills As a vice president of Wells Fargo’s Commercial Banking Group in Woodland Hills, Sehrer is the bank’s expert in the San Fernando Valley on business development for the Middle Market Group Concentrates on developing middle market bank relationships in the Valley, Northern Los Angeles and Ventura and Santa Barbara counties Accountant Greg Lippe said, “John is the top marketing guy in the nation for banks.” A recipient of Wells Fargo’s Golden Spoke Award for being the top producer in the nation “John has incredible integrity, tremendous dedication to the community and he’d never leave a client high and dry,” said Deborah Feldman of Arter & Hadden. “He’ll always point them in the right direction.” A past co-chairman of the VICA Business Forecast Conference and still active in VICA, Economic Alliance of the San Fernando Valley, Commercial Finance Conference of California, Gold Coast Forum and Software Council. – Michael Hart _________________________________________________ Richard C. Taylor President and CEO First State Bank of California, Granada Hills Has been CEO of the oldest community bank in the San Fernando Valley (formerly known as the Bank of Granada Hills) since 1987 First State has increased total assets in the last 12 months from $91 million to $135 million; deposits have increased from $82 million to $124 million Under his leadership the bank has been designated a Super Premier Performing Bank by Findley Reports and a Five-Star Bank by Bauer National Financial Reports Prior to 1987, Taylor was a vice president with the Beverly Hills office of United California Bank and a regional vice president in the San Fernando Valley for Imperial Bank. – Michael Hart _________________________________________________ Mark Turk Senior Vice President Silicon Valley Bank, Westlake Village Manager of the Silicon Valley Bank’s Westlake Village regional office Actively involved in financing start-up and emerging biotech companies along the 101 Corridor and the Central Coast region Formerly chief credit officer at Pacific Century Bank and a vice president at Wells Fargo and Bank of America Previous career as an engineer with Allied-Signal Corp. helped him develop an understanding of the high-tech world Board memberships include UC Santa Barbara Center for Entrepreneurial and Engineering Management, Central Coast MIT Forum and Central Coast Venture Forum. – Michael Hart _________________________________________________ Timothy Turner Senior Vice President and Regional Manager LaSalle Business Credit, Glendale Joined LaSalle Business Credit via the acquisition of Mellon Business Credit in 1999 Formerly Western regional manager for Sanwa Business Credit Corp. Currently director and former president and chairman of Commercial Finance Conference of California Past chairman and founding member of the California Secretary of States Users Advisory Committee Scott Aney of California Federal Bank said, “Tim knows his business, knows his credit real well and is a fierce competitor.” – Michael Hart _________________________________________________ Paul Whitney Senior Vice President Wells Fargo Bank, Woodland Hills John Roberts of Fleet Capital said he’s “an institution” and John Sehrer called him the “granddaddy of commercial banking” Named a regional vice president at Wells Fargo in 1986; since then he’s had primary responsibility for all the bank’s operations in the San Fernando and Santa Clarita valleys and Ventura and Santa Barbara counties Concentrates on providing banking services to business enterprises with annual revenues in the $20 million to $500 million category First went to work at Wells Fargo in 1975 as a commercial loan officer in its Beverly Hills branch Subsequently served as a commercial lender for its Middle Market Group in Los Angeles and San Francisco Opened Wells Fargo’s regional commercial banking office in Warner Center in 1980. – Michael Hart

Warner Bros. Hopes to Consolidate Offices in Burbank Real Estate by Shelly Garcia Warner Bros. could go a long way toward relieving some of the real estate pressure in Burbank. Warner has put out the word that it is interested in looking at a huge amount of office space, anywhere from 200,000 square feet to 400,000 square feet, in the city. The company has no definitive plans to move ahead with a full-scale relocation, but Warner officials say they’d like to explore their options for consolidating operations in Burbank, where the studio is located. “We’re not going to move the lot, and we have other offices all over the place, so it makes sense to look at our options,” said a senior executive. Like The Walt Disney Co. and other entertainment giants, acquisition and expansion strategies over the recent past have left Warner with a patchwork of far-flung locations. The businesses under AOL Time Warner’s entertainment and networks division, which includes Turner Broadcasting System, WB Network, New Line Cinema, Warner Bros. Online among others, are currently scattered from Glendale to West Los Angeles, Burbank and Sherman Oaks. The company has issued a request for proposals and hired Cushman & Wakefield to seek out options for relocating those offices within Burbank, where the studio is located. Just last month, Warner Music Group signed on at M. David Paul Development Group’s Pinnacle office development in a move that will consolidate several of that group’s operating companies. Like the entertainment unit, the operating divisions, including Atlantic Records and WEA Corp., the company’s distribution arm, had operated in a number of different locations. In making an announcement about the move, Warner Music officials said the consolidation would result in substantial cost savings. It is likely the entertainment group has the same objective in mind. Meanwhile, Burbank can surely use the additional occupancy. The downturn in the real estate market followed a spurt of new construction in the city, leaving Burbank with a 29-percent vacancy rate including well over 1 million square feet of direct space as of the second quarter. Warner could opt into some of the newly constructed properties, as the Music Group did, or it could contract for a build-to-suit or some combination of deals. But the wide span of square footage specified in the RFP also indicates that Warner may not necessarily move forward with a full-scale relocation of all its operating units. “They’re keeping a very flexible approach to see what will best meet their needs,” said Bud Ovrom, Burbank city manager. Santa Clarita Center Sold Sierra Crest Center, a shopping complex in Santa Clarita, sold to Zimmerman Commercial Partners, a Los Angeles investment group, for $8.85 million. The strip center, developed in 1991, includes 71,652 square feet of retail space on 4.35 acres at 27125 Sierra Highway. The center houses Taco Bell, State Farm Insurance, Firestone Tires and other companies. It is 90-percent leased. John Erthein and Gregory Mills at Marcus & Millichap Real Estate Investment Brokerage Group represented the seller, Westminster Capital in Beverly Hills. Van Nuys Sale Local real estate investor Rickey Gelb of RMG Properties has acquired a 49,000-square-foot office building in Van Nuys for $4.175 million. The Hathaway Building, at 7120 Hayvenhurst Ave., is 88-percent occupied. Mark Perry, a broker with CB Richard Ellis, represented the seller, HFH Ltd. Gelb represented himself in the deal. Studio City Deal VLS Investors LLC has acquired a complex of five buildings at 10932-36 and 10946-64 Ventura Blvd. in Studio City for more than $4 million. The buildings, a mix of office and retail space on eight parcels of land, total 24,611 square feet of space. David Ickovics, a broker with Charles Dunn Company Inc., represented the buyer. Dunn’s Stacy Vierheilig-Fraser represented the seller, Al Radilaleh. Canoga Park Sale The 50,588-square-foot Valu + Center in Canoga Park was sold to a private investor, Anoushavan Abrahamian, for $7.58 million. Chris Thompson and Garrik Kumjian with Investment Real Estate Associates represented the buyer and seller, Market Venture LLC. Westlake Lease Mercury Insurance leased 30,000 square feet of office space at 5601 Lindero Canyon Blvd. in Westlake Village. Jeremy Dee with Corporate Realty represented the tenant. Keith Green and David Corsello of Daum Commercial Real Estate Services and Darryl Zilberstein and Tony Principe of Westcord Commercial Real Estate Services represented the landlord, Arden Realty. Senior reporter Shelly Garcia can be reached at (818) 676-1750, ext. 14 or by e-mail at [email protected].

Lending: Low Rates, Low Turnout Equal Low Profits By SHELLY GARCIA Senior Reporter A year and a half after the Fed began slashing the prime rate as an incentive to boost borrowing, lenders are taking matters into their own hands. With little net effect on loan portfolios as a result of rate cuts at many of the local banks around the greater San Fernando Valley, lenders are stepping up marketing, lowering or eliminating minimum interest rate levels on floating loans and adding fees for other services in an effort to boost lending activity and profits. The prime rate, which now stands at 4.75 percent, has proven to be a flimsy line of defense against an economy that’s reduced the numbers of new borrowers. And low interest rates are fostering a comparison shopping frenzy for refinancing that’s making it hard for some banks to maintain their existing loan portfolio levels. Local banks are not exactly bleeding. But some are reporting that growth has slowed considerably compared to last year and, with less income from each loan they do write, it is becoming harder and harder to meet profit goals. “Second-quarter numbers weren’t anything to write home about,” said Gary Wehrle, chairman and CEO of Pacific Crest Capital Inc. Agoura Hills-based Pacific Crest wrote $5.6 million in new SBA loans in the second quarter of this year, compared to $8.9 million for the comparable quarter last year. The reasons had more to do with internal management changes than the environment, Wehrle said, but even its income property lending, the larger portion of the bank’s business, has been lackluster. “As I talk to lenders across the city, everybody is a little bit below budget in terms of income property lending,” said Wehrle. Income property, real estate like apartment complexes and strip centers bought by individuals and small companies for investment purposes, has become an especially hot commodity as the stock market has plummeted. But the same reasons leading buyers to seek those properties are keeping sellers from parting with them. With fewer buyers, Pacific Crest and others are facing a smaller pool of borrowers. The story is a little different depending on the particular bank and the sector it serves, but for most, the supply of borrowers has narrowed. When the Fed began slashing the prime rate, it expected to spur the economy by offering companies an incentive to borrow and expand. Instead, many potential borrowers are standing on the sidelines, trying to wait out the economic downturn before incurring additional debt. Others have been so battered by the shutdown in capital spending, they no longer pose acceptable risks to lenders. “There are companies, well-known companies, who a year ago you would have financed their capital equipment needs, that you wouldn’t get near with a 10-foot pole these days,” said Charlie Lombardo, national account manager for Relational Funding Corp., which finances leases on technology, networking and studio production equipment. A few banks report that their new loan volume is up considerably compared to last year. Verdugo Banking Co. in Glendale has seen its loan portfolio grow by 20 percent, according to Chuck Fenton, executive vice president and chief credit officer at the bank. And Silicon Valley Bank in Westlake Village, which specializes in small tech startups, has been able to take advantage of the downturn in venture funding and the dearth of takers for initial public offerings. “There’s less equity and capital coming into these companies, either in the form of IPOs or venture capital investments, and there’s other lenders that are pulling out of the market,” said Mark Turk, senior vice president at Silicon Valley Bank, “and we’re picking up market share as well.” But even these companies are having a hard time matching last year’s profit levels on interest rates that have been cut virtually in half. “Nine percent prime was kind of nice,” said Chuck Fenton, executive vice president and chief credit officer at Verdugo. “But at 4 3/4, it’s taken our net interest margin and cut it significantly. With the growth in our loan portfolio, we’ll beat last year’s earnings, but not by much.” For most banks, the margin percentage between the rate at which they can get money and the rate they charge customers remains constant regardless of how actual market interest rates fluctuate. But because rates have slipped so dramatically, what banks earn on these loans has decreased considerably. “What’s interesting is there’s a lot of fixed costs that don’t change,” said Turk. “So as rates come down, we actually have less net interest income to cover fixed charges. So lower interest rates can be challenging for a bank.” To some extent, banks can compensate for lower interest rates on loans with lower interest rates paid on deposits. But many banks are also having to take additional measures. To make up the difference, Verdugo in the past year has begun applying various fees for other services on a case-by-case basis. “We look at what it’s costing us to keep these accounts and provide the services, and then we have to evaluate whether we can do it and not make money or collect some of the money back,” said Fenton. Others are moving to try and boost the volume of their lending in hopes that larger portfolios will compensate for reduced income on each loan. Pacific Crest, for example, has removed the loan floor it used to impose on floating rate loans. Officials figured that the floors, ceilings below which the bank would not pass interest rate decreases along to borrowers with floating rates, was a deterrent to new borrowers and those in the market to refinance. “We thought, it’s a little competitive out there, the market is a little flat,” said Wehrle. “For anybody who wants to get a loan, let’s give them the advantage of riding this down as low as it goes.” Still others are stepping up their marketing efforts hoping to attract new customers. “We may not be able to do business (with past customers) for another year or year and a half,” said Lombardo. “You have to find other opportunities out there. That’s why I call and pester these people. “I’m smiling and dialing.”

Secession’s Impact on Business Is Aug. 22 Event Topic A debate and forum focusing on secession’s impact on the San Fernando Valley business community will be held Aug. 22. The meeting, entitled “Valley Secession: The Business Perspective,” begins at 4 p.m. Thursday, Aug. 22 at the Sportsmen’s Lodge, 12825 Ventura Blvd., Studio City. Admission is $25 per person, if paid by Aug. 19, $35 at the door. A reception will follow the event. For reservations or information, call 818-379-7000. The event program will offer three interpretations of the Reorganization Proposal, as well as the fiscal, political, environmental and emotional issues secession might raise. Panelists for that portion of the event will include Ken Bernstein of The Civic Forum, Los Angeles County Supervisor Zev Yaroslavsky and Larry Calemine of LAFCO. Joel Kotkin, a Senior Fellow at Pepperdine University, will discuss his findings on a study commissioned by the Economic Alliance of the San Fernando Valley to assess the ethnic diversity and demographics of the San Fernando Valley – and how this might impact a new Valley city. L.A. County Supervisor Michael Antonovich and City Attorney Rocky Delgadillo will discuss the pros and cons of Valley secession from a political perspective; Joel Simon, chairman-elect of the United Chambers of Commerce (UCC), and Rusty Hammer, president of the Greater Los Angeles Area Chamber of Commerce, will voice their opinions on a new Valley city from the business perspective; and Richard Katz of Valley VOTE and Mitch Menzer of One Los Angeles will speak from their respective pro- and anti-secession campaign perspectives. The community forum will close with an extended question-and-answer period from the audience and panelists Ken Bernstein of The Civic Forum, Jack Kyser of the Economic Development Corporation of Los Angeles and Steve Frates of The Rose Institute of State and Local Government. Broadcast journalist Ron Olsen of KTLA-TV will be the event moderator. The program is sponsored by The Civic Forum, Economic Alliance of the San Fernando Valley, Valley Industry & Commerce Association, Asian Business Association – Valley Online, Los Angeles Business Council and the Southland Regional Association of Realtors.

Executive Summary Once again, the Valley banking industry is its typical topsy-turvy self with this year’s list of top banks bearing little resemblance to last year’s. For starters, last year’s No. 1 bank (in terms of assets), Fidelity Federal Bank, is nowhere to be found, having been sold early in the year to FBOP Corp. of Oak Park, Ill., a closely held parent company of California National Bank. That move alone sent the previous No. 2 Community Bank to the top of the rankings. But that’s not the only change. The next most significant changes all involve Union Bank of California’s efforts to buy itself into some of the hottest markets in the San Fernando Valley. Several months ago, Union Bank acquired First Western Bank of Simi Valley and just recently its acquisition of fast-growing Valencia Bank & Trust was announced. And Bank of Granada Hills, while no longer a name on the list, is still there – just in another form. After its own acquisition of another bank, Granada Hills changed its name to First State Bank of California. Additions to the list this year include Premier America Credit Union of Chatsworth, U.S. Bank, First Commerce Bank and Matadors Community Credit Union. The Pacesetter COMMUNITY BANK Community Bank started out in 1945 in response to a refrain that sounds familiar today: Charlie Cook and his brother Howard were frustrated by the bigger banks that seemed to have little time to spare for small, growing companies – the kinds of companies that, even when the two brothers moved to Southern California in the 1920s, were providing the foundation for a regional economy. Hoping to focus on the needs of smaller companies, Charlie formed what was the first new bank in California since the stock market crash of 1929. Reportedly, the state banking office even had trouble finding application forms for a bank charter. What was then the Huntington Park Bank started out with an initial investment of $125,000 and ended its first year with $869,000 in assets. Today, of course, assets for Community Bank, which concentrates on the San Fernando Valley, Orange County and Inland Empire, are closer to $1.2 billion. In the second quarter of 2002, Community Bank reported pre-tax income of $6.9 million. Net income was $4.0 million as compared to $3.6 million for the same quarter last year, representing a 10.3-percent increase. Return on average equity, prior to mark-to-market adjustments, and return on average assets for the second quarter of 2002 were 14.2 percent and 1.2 percent, respectively, as compared to 14.8 percent and 1.2 percent, respectively, for the second quarter 2001. In May, V. Charles Jackson was appointed president, CEO and member of the Board of Directors.

Despite Appearances, Spot on Bankers List Not for Sale From The Newsroom by Michael Hart We’ve all seen the special “Best of ” editions that every publication under the sun publishes at least once a year (and more often if they think they can get away with it). Every paper from the Los Angeles Times to the Pasadena Weekly and back again gives us what they call the unvarnished truth on where in its coverage area you can find anything from the best taco to the most romantic drive to the liveliest place to listen to Dixieland jazz between Avenue X and Street Y on Thursday nights from 8 to 11 p.m. the paper’s choice often sounding suspiciously like the same joint that has a four-color ad on the facing page. Publishers do their best to insist that categories like “Best Woman-Owned Saddle Shop” or “Best Place to Get a Haircut While Listening to Hip Hop” are “editorially-driven” and that it’s just a coincidence that some of their longtime advertisers happen to fit into them. The poor editors of these newspapers, buried under the extra work these special editions require made larger because of all the extra ad revenue they generate can do little but nod in agreement and hope somebody believes them. Only if you’re the kind whose lips move as you’re reading this will you be surprised to see what comes next: Me wanting to say, “That’s not us.” This issue includes a special report identifying what the San Fernando Valley Business Journal believes are the Valley’s most highly respected bankers. The process by which those individuals were selected is similar to that we used earlier this year when we featured the Valley’s top attorneys and 25 Economic Engines that drive the local economy. It is similar to the way we will soon select a list of highly respected accountants to be featured in a special report late next month. The criteria clearly is qualitative rather than quantitative, which has to be a given considering this is an industry in which there is every kind of client imaginable and perhaps the most important quality any of them expects from their banker is a reputation for honesty, credibility and ethical behavior. And those who sell ads for our paper had nothing to do with deciding who would appear on the list. Now you get the chance to decide whether you believe me which, I admit, is hard to do given that there will likely be ads nearby telling you how proud certain banks are of their employees whose names happen to appear on the list. Suddenly I feel I’m in the same boat as all those beleaguered editors whose integrity is questioned as they select the “Best Place to Get a Spinach and Mushroom Calzone on Sunday Night When All the Other Calzone Places Are Closed.” Here’s a rough idea of how the individuals who appear on our list of the Valley’s Top 25 Bankers got there: First, we asked readers for nominations, and got quite a few from both in and out of the banking industry. Second, I personally solicited suggestions from a wide number of people I believed would be familiar with the industry. Patterns developed, the same names were mentioned more than once, information was passed around the newsroom, and before you know it there was a list. It is a collaborative process but, ultimately, I am responsible for making the decision on who is on it. At some point, that list falls into the hands of the non-editorial members of our newspaper staff when they invite those being honored to a reception. And yes, the list also falls into the hands of advertising account representatives. Consequently, you will see ads in this issue identifying individuals on the list of bankers we’re honoring, and you might reach the conclusion because you’ve seen it happen in other publications that those on the list paid to be there. I’m probably, by nature, more cynical and suspicious than most of our readers, so I’d think it too. But it isn’t the case. Every issue of the Columbia Journalism Review has a couple of pages of Darts (accounts of journalism organizations that got it wrong) and Laurels (the ones that got it right). Naturally, the Darts are always more fun to read and most of them have to do with inappropriate activities on the part of editorial staffs to further the cause of their publishers which typically is to generate revenue. People like me live in fear of seeing their names on that page. The line that divides the editorial and sales staffs at a newspaper is characterized as “that of church and state,” the “Chinese wall” and “non-existent” by some, and warrants hours of discussion in newsrooms all over the country. That is because it is not nearly the black-and-white issue that many of us wish it were. As with many of the philosophical issues that guide the journalism profession, there are few absolutes with this one. Nevertheless, the baseline a newspaper must start with to have credibility with its readers is editorial independence; and if a newspaper does not have that, it is useless to its advertisers as well. As far as I can tell regardless of whether their banks bought ads or not the 25 individuals in this special report on Valley banking are highly respected in their industry. And note just for the record there is no “Best Banker Who Can Loan You Money Between 2 and 4 p.m. on a Saturday Afternoon” category. Michael Hart is editor of the San Fernando Valley Business Journal. He can be reached at [email protected].