Banking revolves around every aspect of our life. Between 1990 and 2008 about 100 new banks were forming every year. Once the banking crisis hit there were only 7 new banks formed between 2009-2013 and Steve Tessler was behind one of them.
Alan: Welcome back I'm here today with Steve Tessler, he's the executive vice president of California Bank of Commerce. Steve welcome to today's show.
Steve: Alan thanks for having me good to see you.
Alan: So Steve before the listeners, we've known each other for a while and but can you give us your background and what led you up to where you're at today?
Steve: Sure, I like you started in the public accounting profession many years ago, I hate to say how long it's been because it's been decades but started as- it was interesting. Before I got into public accounting I had a desire and passion to be a professional racquetball player and so I was pursuing a career if you will as a professional athlete although I never was that good it was more and more a figment of my imagination than true reality but I thought it's something I would pursue. And so I was member of an athletic club in San Francisco which is where I grew up and once I realized that the opportunity to pursue my dream probably wasn't going to be a reality because I just wasn't that as good as I as the rest of the country was I happen to know a gentleman at the club who was a certified public accountant and I had gotten a degree in accounting in college and I started speaking to him about opportunities in public accounting and so he was kind enough to take me aside and go through the telephone directory when there was still the yellow pages and kind of led me through the accounting firms that he thought I should approach but becoming a tax intern and so he was very kind and said I wouldn't talk to them, I would talk to this firm, I would talk to this firm and lo and behold I'm following his advice I ended up securing a tax internship position with a large CPA firm the largest actually at the time on the western United States. It was called John F. Forbes and company which is no longer in existence it actually merged into Maine Herdmen which merged into Peat Marwick which became KPMG. So I started my career in public accounting thanks to Jim and was in it for about seven years and it was a great opportunity to really learn about business and to understand businesses- many different industries- and it led me to a realization that there was an underserved segment of the business population and that was primarily small to medium sized businesses and I eventually migrated my public accounting career into a firm called Laventhol in Horwath which had a small business advisory group and I really enjoyed that element of it, enjoyed dealing with privately and family and closely held entrepreneur businesses and the entrepreneurs behind those businesses. And it was an opportunity to to really understand and really develop relationships with individuals because my career has always been focused on developing relationships and I feel like developing relationships is really the essence of business until you become very very large when you feel more like a vendor than something else but a lot of the individuals and a lot of companies that we deal with and I've dealt with in the past have always valued that relationship aspect of business. And so when I was in public accounting I interfaced with many bankers because for a lot of the companies that we had as clients their primary capital source was the bank and there was always a bit of a chicken-and-egg relationship between the public accounting firm and the bank and that for the bank to renew a company's revolving line of credit it was often predicated on the public accounting firm issuing the financial statements. And the public accounting firm wouldn't necessarily issue the financial statements until they knew that the bank was going to renew the line of credit. So I got to know many bankers over my years in public accounting and I reached a point in my career in public accounting- sort of a crossroads and deciding did I want to continue this down this path or was there something else that I felt was better aligned with where my skills and where my passion was and I was really very focused on sales and marketing and so I approached the managing partner of the firm that I was with at the time and sat down with- his name was Bob and I sat down with Bob in his office and had Bob here's what I'd really like to do I appreciate the fact that the firm has used as as partners as the primary revenue generators for business but I said you know there could be real value in having someone that's truly dedicated to doing it on a full-time basis and he thought about it and looked at me and said Steve I'm sorry but this isn't the way we generate business at the firm. And so it caused me to pause and think about where I was and what I wanted to do when I really enjoyed meeting people developing relationships and it was a time for pause and reflection and I had an opportunity I thought to leverage that skill and so I started talking to some of my colleagues in banking who I'd interface with over the years. And I was interested in learning something some new skills and acquiring some new skill set but that leveraged my existing skill set from public accounting and also leveraged the business development marketing skill set and so I decided that I would leave public accounting after about seven years and I convinced someone at Wells Fargo Bank to hire me and I had the reason one of the reasons I approached Wells Fargo was because they had a very forward-looking sales culture for banks and for banker financial services in general and so I convinced an individual to give me a job at the main office of the of Wells Fargo in San Francisco which is where I'm from and was living at the time. And I was diligent and worked hard, I had a lot to learn I knew a lot about financial statements and understanding financial statements but I didn't know a lot about banking. And so they were kind enough to put me through a training program and after a year or so at the bank in their business I was approached by one of the members of the sales team at Wells Fargo in their commercial banking group and they asked me if I would be interested in joining their group. They said, 'Gee I see you here at seven o'clock at night and at six-seven o'clock in the morning and you must seem to work hard and seem diligent and seem to be effective in what you do." So that's really where I wanted to be because when I started at Wells Fargo started, with smaller businesses and I wanted to get into a new group- slightly larger businesses and so it was a great opportunity for me to step up.
Alan: Steve I need to take a quick break, I'm visiting here today with Steve Tessler, he is Executive Vice
President California Bank of Commerce and we'll be right back after these messages.
Alan: Welcome back I'm visiting here today with Steve Tessler, he's the Executive Vice
President California Bank of Commerce and Steve in the first segment we talked about- you know you started your foundation and career as a CPA and as people often do, they reflect back and say, is this really what I want to be doing, so after some pondering and thought moved over into the banking sector. Now, today you're with a different bank, how did you go through the transition of moving out from Wells Fargo to California Bank of Commerce?
Steve: Wells Fargo is a great place to learn, we all need to learn about an industry that we're not familiar with or a profession we're not familiar with by starting with a larger company and [I] got some great experience but I reached a point in my evolution where I enjoyed working with the type of clients that Wells Fargo had, what I didn't enjoy as much was just the large company element of it. And I really wanted to do something that was more entrepreneurial and more in alignment with the clients that I had served and the clients I knew. And it so happened that I was working in downtown Oakland for Wells Fargo and about a half a block away was a small regional bank called California Bank of Commerce and I stopped in there one day to say hello to some people that I known there and who actually came had come from Wells Fargo because California Bank of Commerce had had stumbled a bit in the early 90s and was in the midst of a turnaround and so part of that turnaround involved bringing in some new management and that new management was to senior executives from Wells Fargo. So I stopped in one day only half a block away just to see what was happening at California Bank of Commerce and that led to a series of discussions with Herb and John and we ended up striking a deal, they were kind enough to make me an offer to help me grow the bank they had laid the foundation for growth and wanted to augment that by hiring some key people to help propel the growth, and that was an opportunity I thought about for 24 hours and especially given the fact they offered me a small equity position in the bank and so I spoke with my wife about it and I said this is going to be ultimately a lot more fun than what I'm currently doing, not that I didn't enjoy what I was doing, but I think there's going to be even more fun, a little riskier but more fun. So I decided that in early '95 to join California Bank of Commerce. And California Bank of Commerce was a great platform for me and a bunch of other individuals. We all we all met a California Bank of Commerce- I mean at Civic Bank of Commerce and it was a great place to launch from. And we ultimately grew Civic Bank, we doubled the size of the bank in about seven years and sold the bank in March of 2002 to City National Bank out of Southern California. so it was a good event, it allowed the bank to move to its next iteration if you will. Unfortunately it didn't work out as well as some of us had hoped, so it was an opportunity to move on from there after about a year and a half with the city national and I happen to join a bank in Danville called Diablo Valley Bank which had started up recently, I don't know if you know this but there weren't a lot of Bank formations between the period- I did look up some statistics- between 1990 and 2008 there were over 2,000 new banks formed. It was about 100 a year. From 2009 to 2013 only 7 banks formed in the entire United States and that's due to a number of reasons low interest rates the economic crisis, Dodd-frank, regulation there was a bunch of things that happen but there were only seven new banks formed and I happen to be part of one of them- which was Diablo Valley Bank. Diablo Valley Bank honestly was a grow it and sell it strategy by the two founders. And the Diablo Valley Bank sold in June of 2007 to Heritage Bank of Commerce which is a local bank in San Jose. So during that time I had an opportunity to follow the progression of California Bank of Commerce, very similar to Civic Bank of Commerce, and it turns out that a number of former civic colleagues were apart or we're thinking about becoming part of California Bank of Commerce. So as I'm sure you know Alan you know who you work with makes all the difference in the world and you have to enjoy who you work with and a number of us had a great experience at Civic Bank and the opportunity to recreate Civic Bank in California Bank of Commerce was appealing and attractive and the timing of the sale of Diablo Valley Bank to Heritage Bank was a good one, because Civic Bank or California Bank of Commerce open for business in July of 2007. And the Diablo Valley Bank completed its sale in June of 2007 so the thought of, if you will, getting the old band back together again was a very compelling one and a very attractive one and that's what happened. So California Bank of Commerce was formed with pods of two people, a pod from Civic Bank of Commerce and a pod from Mechanics Bank. And so it was the Civics Bank pod that I was the most familiar with and which was most attractive to me. And so that's how I ended up the California Bank of Commerce today. And we're in now ten years- California Bank of Commerce had that a birthday July 17, 2017.
Alan: You know Steve I'm up against the break again, I'm visiting here today with Steve Tessler, he's the Executive Vice President California Bank of Commerce and after we get back, I want to walk through what happened when the tarp came in there 2008. We'll be right back after these messages.
Alan: Welcome back and visit here today with Steve Tessler, he's Executive Vice President of California Bank of Commerce and Steve in the previous segment you were talking about how California Bank of Commerce launched in July of 2007. Well a year later that everything got turned upside down in this industry and here you were, a new a new startup trying to get your ground settled in and how did you guys manage that?
Steve: It's interesting because we get asked this question a lot. Had we tried to raise capital for the bank's six months later it probably wouldn't have happened, so it was fortunate that we raised our capital in May of 2007 and launched the bank in July and one of the benefits that we had- there were several benefits that we that we were able to capitalize on. The first one was that we started with an empty balance sheet. We didn't have any assets when we launched the bank, so it wasn't as though we had a portfolio of loans or relationships that we had originated three to five years later that now all of a sudden because of the economic situation we're going to all of a sudden have problems. So we didn't have to worry about that. Second is the strategy, we were 100% business bank. Two of the sector's that were probably most adversely affected during the economic crisis were residential real, estate builders, and developers. I mean certainly business as a general what was impacted, but there were certain sectors get impacted much harder than others. We're not are not a residential real estate lender, still even today we're not. Our focus is commercial banking, so we saw we missed that bullet, we don't bank many builders and developers, so we missed that bullet which helped which helped keep us alive. But more importantly we had some very deep relationships with previous clients. And we were able to port them over to the new bank. We were also able to acquire new clients that were for lack of a better term, were the baby being thrown out with the bathwater, maybe their existing bank was experiencing as many banks were experiencing some challenges and so in some cases all of their customers all their clients felt some pressure from what was happening in the banking sector. And so it was an opportunity for those clients that felt pressure felt like they needed, felt like it was undue and that the stress wasn't necessary. And that they had an opportunity to move to a new bank like ours. On the one hand, we were a young bank, we were a startup we didn't make money for the first three years. So we had to convince clients to trust us. And so there was there was an element of selling if you will, with some new clients that this was the right place for them to be. Everything sounded great, it was the right story was the right focus everything was perfect for them except 'you've only been around two years, how do I know you're going to be here three more years' and so there was that element which we had to overcome. I wouldn't say we're very persuasive, but we're very genuine about what we tell people.
Alan: Now how many offices today does bank have?
Steve: Today the bank has six offices, and started in Lafayette, expanded to Oakland and now have offices in addition to those two offices in Fremont, San Jose and Walnut Creek, we actually have two offices in San Jose.
Alan: Now as executive vice president what is your day-to-day responsibilities within the bank?
Steve: Oh it varies but a lot of it is focused on developing strategies for the growth of the bank, but also executing those strategies and looking for new opportunities with clients in our target industries and our target markets, so I spend a lot of time trying to develop new relationships for the bank but also working with some existing relationships through our existing relationship managers to cultivate those because as I think you know the best source of businesses is referrals from your existing clients. So we have to make sure that we nurture those relationships to the best extent that we can but it's also looking at new opportunities, new markets new clients, niches specialties opportunities to demonstrate how we're different and not just a vanilla commercial bank.
Alan: And now how would you differentiate yourself from the competition?
Steve: California Bank of Commerce is really predicated on relationships, now that's tends to be an overused term in banking and I wish it hadn't lost some of its luster but I think to a certain extent it has, but we really spend time getting to know our clients. Because we know that business is cyclical, it does not always go up and it does not go straight down but it goes in cycles. And we what we've found is that there are a lot of people who are your friends when business is going well, the question is, who are your friends when business isn't going so well. And so if you have a deeper understanding of what your clients, with their business is about and what their strengths and weaknesses are, you can be a better advocate for them and more supportive of them during periods of cyclical down times or during periods of during a slow time or once some unforeseen event happens and you're not caught by surprise and that's one thing that this bank does extremely well is that because we know our clients well, we can ride through challenging difficult times with them and we've demonstrated examples that over and over- being able to do that. That is one of the key differences between California Bank of Commerce and a lot of other banks and the other key difference is just the execution factor, we can get things done quickly.
Alan: Steve we're out of time today, but I've really appreciated having you on this show. I've been visiting with Steve Tessler, he's the Executive Vice President of California Bank of Commerce and quickly for the listeners if someone wanted to reach out to you how would they go about contacting you?
Steve: They can call me at the Oakland office or they can email me at you would you like those numbers now?
Steve: They can reach me at area code 510-499-9509 or by you via email at stesslar@BankCBC.com or through our website which is CaliforniaBankofCommerce.com
Alan: Thanks for being on today's show.
Steve: Alan thanks for having me.