One of the Best Performers in California : Santa Clarita Bank Has No Frills, Few Ills

Don Guglielmino says he is “a regular guy.” The walls in his office are decorated with a Boston Celtics T-shirt, a Notre Dame pillow, a few bumper stickers and lots of family snapshots.

The office says a lot about the bank he runs. Santa Clarita National Bank, based in Valencia, is a consistent performer that succeeds by making loans to ordinary, small- to medium-sized businesses.

No foreign loans. No frills.

Not Active in Residential Real Estate

Despite its location in the Santa Clarita Valley, one of the fastest-growing areas in California, the bank has stepped aside from the residential real estate boom, leaving it to the bigger lenders.

Bank analysts say Santa Clarita National, with $195.7 million in assets, not only is among the best-performing banks in the San Fernando Valley area, it also is an impressive performer among the 400 banks in California.

“It’s called running a bank sensibly, as a business,” said Guglielmino, 67, who has the easy demeanor of a hardware-store owner. He does, in fact, own Newhall Hardware, as well as Newhall-Valencia Plumbing Co.

But his full-time job, from 7:30 a.m. to 6 p.m. weekdays, is with the bank. Guglielmino has been a director of the bank since 1966, and was named bank chairman in 1975, when founder Elisha J. Agajanian retired.

“The directors all knew each other for years. And they felt I was a good businessman,” he said. “I had zero experience as a banker.”

But Guglielmino’s business acumen paid off in banking as well. Santa Clarita National’s loan mix is “well distributed,” said Gary Findley, a Brea bank consultant who called the bank’s performance “commendable.” He noted that the only blemishes on the balance sheet are loan losses, up nearly threefold from 1985 to $1.4 million last year. But the losses are still only a fraction of the bank’s $105-million loan portfolio.

1.12% Return on Assets

One benchmark of excellent performance for any bank is a 1% or better return on assets. Last year, Santa Clarita National had an ROA of 1.12%. It was 1.18% in 1985 and 1.09% the year before that. By contrast, California banks with assets from $100 million to $499 million had an aggregate ROA of 0.82% for the first six months of 1986, according to the California Bankers Assn.

For 1986, Santa Clarita National’s earnings were up 8%, to $2 million.

It helps that the bank lends to small- and medium-sized companies, so-called middle-market lending that tends to be highly profitable.

The bank was founded in 1965 when little more than radishes and carrots populated the Santa Clarita Valley. The bank now has 10 branches, six in the more-developed San Fernando Valley.

The bank might seem a ripe target for savvy investors, but it’s not easy to buy the stock. Those who want it will not locate it through usual channels such as the New York Stock Exchange. Instead, Santa Clarita National’s stock trades exclusively through the bank itself.

“A guy calls up and he wants to sell. We have another who wants to buy. And then we arrange the deal,” Guglielmino said.

Irving Einhorn, regional administrator for the Securities and Exchange Commission in Los Angeles, said one advantage for those banks that stay closely held is that they can keep everything in friendly hands. “They call an annual meeting, they go ‘boom, boom’ and everybody goes home,” he said.

Santa Clarita National’s stock consistently trades close to its $26.64-a-share book value, said Kenneth L. Koehler, bank vice president and cashier. The bank has 513,854 shares of common stock outstanding, and Guglielmino owns 45%.

Findley said that, if Santa Clarita National were to sell its operation, the bank would go for about double its $13.7-million book value--a premium over the 1 1/2-times book value paid for average banks.

But Guglielmino has no intention of selling, or retiring.

Despite Guglielmino’s low-key, “aw, shucks” manner (he refused to be photographed for this story), he obviously has done very well for himself. He still lives in Glendale, close to where he was raised. But, as his position in the world has climbed, so has his taste.

One of the bumper stickers on his office wall reads, “I My Jaguar.”

SANTA CLARITA NATIONAL BANK Valencia-based Santa Clarita National Bank specializes in loans to small to medium-sized businesses. The bank employs 248 at its ten branches in the San Fernando and Santa Clarita Valley areas, and has 513,854 shares of common stock outstanding.