They're an attractive mix of old and new, of local celebrity, Malin Burnham, and new-to-San Diego money represented by Leon Reinhart, a worldly 55-year-old banker who moved to San Diego last year to pull together the ailing Bank of Southern California with First National Bank, which Burnham founded in 1981 and still chairs.

    Remnants of the old BSC and FNB are everywhere, but the new First National Bank also is a different institution, remade in the last nine months by Reinhart and Robert Whetten with the financial support of Eloy Vallina, who now owns about 18 percent of the new First National's stock - a lot more than Burnham still owns.

    Recapitalized and cleansed of weak assets, First National again aims to be a player in San Diego with Burnham occasionally opening old doors. One of only seven commercial banks still headquartered within San Diego city limits, First National could triple its assets to $1 billion in five years if Reinhart's vision is clear and his luck and professionalism are good.

    Eloy Vallina (pronounced Va-yee-na) was the chairman of one of Mexico's largest banks, Multibanco Comermex, although he started in the trainee ranks of Chemical Bank. He and Whetten are veterans of State National Bank in El Paso, Texas, now known as Norwest El Paso. Leaving Citibank, where he began his career with Leon Reinhart, Whetten about 18 years ago formed a group with Vallina to purchase the old M Bank and El Paso State Bank, merging the two sicklings into State National with about $350 million in assets. Whetten served as CEO, cleaning and growing State National to $1.3 billion in assets before selling to Norwest in December 1995 at six or seven times his and Vallina's original investment.

    Whetten knew Leon Kassel, one of the final owners of Bank of Southern California, and it was Whetten who approached Burnham about buying First National, too. The two were among "several banks" in San Diego that Whetten looked at, says Reinhart. Whetten's modus operandi is to find 'em, clean 'em and grow 'em. Probably sell 'em, too, but first things first.

    Putting together a team of investors, including Vallina and other sellers of State National, Whetten negotiated the purchase of BSC and FNB "and then was called off to be a mission president for the Mormon church in Paraguay, and that’s where I come in," says Reinhart, a career-long Citibank banker with assignments in the Mideast and Europe who'd been leading Citibank's team in Mexico City at the time of Whetten's call. "He gave me a call and said, 'How would you like to come back home after 28 or 29 years?' I was born in Los Angeles, raised on the beach in Long Beach, and spent a lot of my time in San Diego because I have a lot of relatives here.

    "I guess I carried through the merger on Sept. 30 last year, which obviously meant putting the two banks together. They had two different computer systems, a different set of products. We went through the typical merger midnight oil for three or four months until the lights were working, and the telephones, and the business plan. The major players from that point on have been people like Bill Farnsworth, who I brought on, who was a top executive at Citibank for 38 years. He opened up the western part of the United States for Citibank, was based in Los Angeles, built Citicorp Tower, purchased Citicorp Savings - or got the license to have Citicorp Savings operate in California - and also had lived in Asia, was the head of Grindlays Bank, was in charge of Latin America for Citibank, but his last five years were out here on the West Coast. As a director, he has a major influence on business plans at the bank. Bill's the chairman of the audit committee.

    "Another key player on the board is Ed George, the ex-president of Torrey Pines Bank. He's the chairman of our loan investment committee."

    What’s Burnham's role?

    "Malin clearly has a vision of making San Diego a better place," says Reinhart. "He understands its unique geographic location and the tremendous resources that are available here. He's always offering strategic and visionary types of ideas. He's the chairman of the bank and he's on the loan investment committee. Except when he's traveling, (I speak with him) every week. Every other week we have the loan investment committee and once a month we have a board meeting. We frequently get together at social gatherings or he attends a bank function, so quite frequently..."

    Ron Perlman, a real estate developer in San Diego, also is on the new First National board, as are Nick Nicholas, a retired Point Loma real estate businessman; Richard Corona, a partner in a San Diego law firm; and Reinhart.

    "Not on the board, but a very key person, has to be Vince Siciliano, who joined us on Jan. 1 (as) chief operating officer," says Reinhart. Siciliano is former president of Danielson Trust and previously president of Aaron Feldman's International savings.

    "The guy knows everything, from real estate lending to commercial lending, from the trust department to how to manage the back shop, from how to network, both in the financing community and business community, to how to be involved in the local community," says Reinhart. "He's sat on I don’t know how many local boards and been chairman of more than one. He's made a very strong impact on the officers and employees of the bank."

    Senior managers include Jim Lemery, former chief financial officer of Torrey Pines Bank under Ed George; Glenn Marshall, chief credit officer, formerly with Bank of America; Leonard Wise, who runs First National's data processing unit, Infoserv; Carlee Harmonson, a veteran of Danielson Trust Co. and HomeFed Bank, brought over from Danielson by Siciliano; Denise Iverson, a strategic planner, former CFO of FNB and earlier an accountant with KPMG Peat Marwick; Maria Kunac, a former BSC executive and an expert in financial structuring, especially real estate; Nancy MacKinnon, head of human resources, previously with Chase Manhattan; Carlos Hernandez, previously in charge of the international department for Norwest El Paso; Ken Cooke, head of commercial lending and previously the head of Metrobank in San Diego; and Julie Smart, chief administrative officer.

    FNB has about 145 full-time employees, plus 15 part-timers, mostly in the Infoserv area. The merger created some duplications of duties. Upon the merger, the new bank had 190 people.

    The new business plan sets a course for a modest full-service commercial bank without a large infrastructure but with extraordinary data processing ability and a competent foreign exchange facility. "Fortunately," says Reinhart, "when the two banks came together they had a lot of complementary products (as opposed to duplicative products). Once you tied them together they became complementary. Example: One bank had a trust department and the other bank didn’t, but it did have a data processing center that served 55 financial institutions.

    "Both sides had the core products, which bringing them together strengthened. For instance, real estate and construction lending, commercial lending, mortgage brokerage services, cash management services, consumer products, credit cards, ATMs, merchant card services. What have we added since then? Foreign exchange. We’re now implementing trade finance, an international department...

    "Trade finance is mostly for San Diego businesses that either import or export. There's roughly $16 billion a year in trade that flows through San Diego, and I think that number could grow substantially, and a lot of that needs financing. (Much of it is financed) with capital and that’s inefficient, taking foreign exchange risks by, perhaps, ordering in foreign currency. If that foreign currency is going up and down, you could be in for some significant losses. Currency speculation is not the business trade businesses should be in. Our foreign exchange operation is totally geared toward commercial and retail foreign exchange, money made on good buying or selling, as opposed to taking speculative positions. It’s not taking positions.

    "A good customer is a freight forwarder to Japan. They pack people’s things up in the United States or anywhere in the world and move them to Japan. They won’t know for three months how much their agent in Japan is going to charge them in dollar terms. In 1995, there was a revaluation of the Japanese yen, and so when they paid, they paid more dollars than estimated just because of the wild fluctuations in the Japanese currency. And although they made an operating profit, they made a significant foreign exchange loss. This is something that can be covered by a commercial bank.

    "The idea here is to be very good at all of the core products and cross-sell the products to people so they don’t have to go shopping at different institutions to satisfy their financial needs. Generally an independent bank will focus on a certain niche, product or segment of customers and have a rather limited product offering. In itself, that’s not bad. That's one strategy. But we inherited a large product base and we hired people who understand the wide range of those products."

    The new First National also is eager to help finance business beyond its own loan limit by allying itself with larger institutions. It has done so recently and intends to do more.

    Already a profit center, FNB's Infoserv data processing unit now serves 60 financial institutions, FNB being its largest, by processing checks, statements and other "ticket" items. The largest institution other than FNB served by Infoserv has assets of $150 million. Ten of the clients have assets exceeding $75 million. The remaining 50 average $30 million each.

    FNB's non-interest income, to which Infoserv contributes significantly, was about 20 percent of total operating income of about $650,000 last year, and that’s typical. "My ultimate goal is to push it much closer to the 50 percent mark," says Reinhart.

    The new president and CEO of First National now oversees about $281 million in assets. The bank earned $726,000 in the first quarter.

    "I'd say $1 billion (of assets) is achievable within five years," says Reinhart. "It sort of depends on whether we do it through acquisition, alliances or de novos. The prices of most of the acquisitions right now don’t make any sense unless you can buy something that really adds a lot of value. There has to be a lot of synergies to buy and merge at the multiples that banks are now trading in the stock market."

    What are Reinhart's initial impressions of San Diego? "Other than being beautiful? It has the potential for a lot of economic growth because of the high quality and highly educated people here, the think-tank industries, all the telecommunications. We were moping about with the government pulling out (of defense businesses). That was the best thing that could have happened to you because you really had to think your way out of the box, use some ingenuity, and that’s what San Diego’s done. All it needed was the opportunity to start turning around. San Diego, which had maybe the worst economy during the recession, has the best economy during the uptick."