Hans Ganz

“It’s a concern,” says Pacific Trust Bank President Hans Ganz about interest rates.

Ganz could be more concerned about an uptick in interest rates than the casual observer: his Pacific Trust Bank concentrates nearly all its loan activity in mortgages, relying on independent brokers as its main source of business.

“If rates go up 1 percent from here, I don’t see a big change but I think we’ll see cooling off in the local market,” Ganz says. “That would be desirable because (the real estate market) can’t continue at 20 percent appreciation each year unless salaries increase at a corresponding rate.”

For the time being, though, Pacific Trust’s cash cow is fairly contented. At the end of the first quarter, the bank had $650.7 million in total assets, a 30 percent increase over the same period last year, and a 17 percent rise over the fourth quarter.

First-quarter earnings followed suit. Net income of about $1.2 million represents a 25 percent increase over a year ago. Shares of the bank’s holding company, First Pactrust Bancorp Inc., have been on a run from about $18 a year ago to the $22 range recently.

It’s a transformation that has taken the bank from its origins as Rohr Employees Federal Credit Union in 1941 to a charter change to a federal savings bank in 2000, and an initial public offering in 2002. Chairman Alvin Majors and directors Francis Burke and Donald Purdy are former Rohr executives.

The bank traditionally has placed offices in relatively affordable housing zones such as Chula Vista and Temecula, but its most recent branch opening was last year in Rancho Bernardo, a “lucrative deposit area,” Ganz says.

Ganz, a Swiss native who once worked at Great American Bank, says Pacific Trust is “married to real estate” and one presumes happily so, but he says the affordable housing crunch could cloud the region’s business climate.

“What we are seeing is that employers are getting very concerned that they can no longer attract middle and lower management because they cannot afford to live here,” Ganz says.

The solution?

“It’s not a simple one,“ Ganz allows, “but it certainly has to do with creating density where density would make sense — it is so hard in this town to obtain a building permit.”

Even if the housing market were to cool, Ganz says downturns in regional markets are bound to be less severe than in the recession of the early ’90s that hit aerospace companies such as Rohr and General Dynamics.

“There’s a vast difference from this market to the last downturn of the early ’90s when there was a 10 percent to 30 percent contraction, and a severe contraction of employment in aerospace,” Ganz says. “The employment base is more diverse; the military is not the only game in town. Aerospace has been replaced by high-tech in an admirable fashion.”

Though rates and housing prices may continue to rise, Ganz says Pacific Trust’s mortgage model makes the bank unique in a more crowded field of local lenders.

“There are a dozen commercial banks in town; there’s only one bank like us,” he says.