A Banker for Business

Paul Rodeno’s Security Business Bank targets small and medium-sized businesses in the era of big bank failures and consolidation

By Manny Cruz

Sure, Paul Rodeno loves his banking job. Been doing it for more than 20 years. And even though the financial industry has taken a big hit in the belly — mostly the big fellas — Rodeno has found a comfortable niche in a financial institution that caters mostly to small and medium-sized businesses — the Security Business Bank of San Diego. He’s the president and CEO — the founding CEO.
But ask Rodeno what he would like to be doing if he had to leave his job and take on another profession, his answer might surprise you.
“Gee, that’s a tough one,” he says. “I think if I had my druthers, I’d want to be a professional athlete.”
“Business is a great mental challenge,” Rodeno continues. “There’s nothing like combining a mental challenge with the physical challenge of an athlete. You can really tax your mental capacities as well as your physical capabilities. To have that as a job would be a real interesting challenge.”
But athletics aside, Rodeno is content enough to tax his mental abilities in an industry that has been shellshocked by bank failures — most recently in Georgia and Florida, raising the number this year to 85 — bad loans, and other problems.
Indeed, the Federal Deposit Insurance Corp., the agency that insures bank deposits, reported in February that 702 banks in the U.S., with combined assets of $402 billion, are on the brink of failure. At the end of last year, those banks were put on the agency’s “problem list,” a 27 percent increase from the end of last year’s third quarter. The FDIC reported that total industry assets dropped by $137 billion during the fourth quarter of 2009 and by $731 billion for the year, the steepest decline since the agency was formed in 1933.
While those figures are alarming, Rodeno gives Security Business Bank high marks for remaining stable in an unstable industry. (The bank’s main services include commercial loans, SBA loans, commercial real estate loans and construction loans.) “We’ve got some extremely strong capital ratios and have had 10 consecutive quarters of high ratings from the Bauer rating company (BauerFinancial),” says Rodeno. “They continue to rate us at five star (Superior). We’re in great shape, we’re making money. Overall, we’re a leader and will continue to be there.”
In May, the bank reported total assets for the first quarter of this year of $201.8 million — down from $205.1 million in the same period of last year; core deposits of $149 million —up from $134 million; loans of $160.4 million — down 4.3 percent from $167.6 million; quarterly net income of $170,000 — down from $202,000 in the first quarter of 2009; and a risk-based capital ratio at 15.6 percent compared to 15.1 percent last year in the first quarter.
“Our core deposits growth, which is now at 93 percent of total deposits, and solid net interest margin display our ability to operate successfully despite the difficult economic environment,” Rodeno said in a statement accompanying the report.
Rodeno and a group of investors established Security Business Bank soon after his former employer, Eldorado Bank — where he had been vice president and chief administrative officer — was sold to Zion Bancorporation in 2001. The frenzy of big bank mergers at the time left Rodeno thinking that a specialized local bank could fill a gap in personalized services that were not being met by the larger institutions. Security Business Bank’s first full year of operation was in 2003 with the specific mission to serve the needs of small and medium-sized businesses. Today it operates its main office Downtown at 701 B St. and has branches in Carmel Valley and Carlsbad.
“Community banks really differentiate themselves (from larger institutions) by being in touch with the community,” says Rodeno. “We are in the community, lending to community businesses. That’s what we do so well. We can understand and evaluate and provide not just credit, but advisory services as well.”
Future growth doesn’t necessarily mean adding more branches, according to Rodeno. “We can bank with the branches we now have, we can double the size of the bank without adding brick and mortar,” he says, noting that online banking has become a big part of the business.
Rodeno entered the banking industry in 1977 as a commercial loan credit administrator and a commercial lending officer for First Interstate Bank in San Diego, later working as the chief operating officer and director of San Dieguito National Bank before its sale to Eldorado Bancshares. The difference between the industry then and now has been enormous, he says. “Technology has been the biggest change; it’s so dramatically different than when I joined. Now, for example, we don’t even touch checks. They’re electronically transferred to the Fed. “It’s just instantaneous, more efficient for us and more efficient for the client.”
Because of major bank meltdowns and takeovers in recent years, credit unions have become highly aggressive in their attempt to lure customers away from banks, but Rodeno’s isn’t one of them. “They don’t impact us at all,” he says. “They’re competing against Wells Fargo and some of the other big guys.”
And as far as competing against the “big guys,” Rodeno says Security Business Bank has the advantage. “Access to a business’s decision makers is what sets us apart,” he says. “Everyone here  who visits a client has the ability to make a decision without the need to call San Francisco or New York. It’s the direct access to the management and leadership that we have. And we can customize our products to fit a business’s needs.”