Alan Douglas

For about two decades, Alan Douglas has been president of a bank in Rancho Bernardo. The first one was the Bank of Rancho Bernardo, which he ran for 12 years before it was sold to Escondido-based 1st Pacific Bancorp in 1996. The latest is 7-year-old Rancho Bernardo Community Bank, which opened in 1997. At RBCB, Douglas holds the titles of president, CEO and chair.

“This was my deal,” is how Douglas puts it. As part of its buyout of the Bank of Rancho Bernardo, 1st Pacific wanted Douglas to sign a non-compete agreement that he thought was a little too restrictive. So he opened Rancho Bernardo Community Bank.

From an initial stake of $5 million, Douglas and Co. have grown to $108 million in assets, and an ROA well in excess of 1 percent. RBCB’s formula relies on a deposit-rich neighborhood and a residential real estate boom that’s still in progress.

“We do a lot of construction lending for single-family homes and did most of the loans for the Heritage, a 100-home development,” Douglas says. “We also do some commercial construction for owner/user properties, business loans for working capital, law firms and CPAs.”

Douglas says his practice is to make sure contractors he works with get their money promptly. “They like to get paid and we run our own fund control. We make them a promise that it won’t take more than three days from the time you submit a deal, and we live up to that.”

Although RBCB has no branches, it does operate a data processing unit, which serves only the bank. “The savings it brings is relatively significant, about $100,000 a year,” Douglas says. Regulatory demands make it too expensive to offer the data processing services to other institutions, he says.

Falling interest rates “nailed us” in 2001, Douglas says. “We run the bank as an asset-sensitive bank — we just don’t do fixed rate loans; the premise is that’s fair to everybody, so if money gets expensive they pay more and when it is less expensive they pay less. Theoretically, nobody gets hurt, but when your deposits are at 8 percent and your loan yield is 6 percent — so we learned a lesson to put floors on our loans to get protected.”

The renaissance of de novo community banks makes Douglas glad he’s past the de novo period. “You’re starting to see ones that are getting into profits,” he says. “It took us a year and a month to be profitable, but I was pulling from a bank that was less than a mile away from me and we didn’t have quite the competition.”

Douglas says one of the difficulties of running a bank in San Diego is, “it’s heavily real estate oriented. That’s a disadvantage because regulators see it as a concentration risk, and they can do things to make you seek other kinds of loans, they ‘educate you’ all the time.” He sees this as a reaction to the commercial real estate bubble in the 1990s that drove some banks out of business.

Going forward, Douglas says the bank’s plan includes a discussion about branches, but “as long as we can attract deposits with a single office, we probably won’t branch.”