In Southern California: Bankers Meet Challenge of Booming Population

Abstract

SOUTHERN CALIFORNIA banking institutions today face the greatest challenge as well as the greatest opportunity in the history of this dynamic metropolitan area. Commerce and industry are expanding at an unprecedented rate and banks must keep on the move to provide the service vitally needed in this important market area. From a sleepy Spanish pueblo, Los Angeles has grown, in little over a century, to a city which one day may well be the world's largest metropolis. Most of this explosive growth has taken place in the brief period since the end of World War II. Even in the period immediately following the war, Los Angeles County was the world's leader in agricultural production. Orange groves stretched for miles from the towering San Gabriel Mountains, which surround the Los Angeles basin, to the beautiful beaches which stretch from Santa Barbara to San Diego. Despite the dominance of agriculture, Los Angeles was best known for another industry-motion pictures. Aircraft manufacturing pretty well rounded out the economic picture at the conclusion of hostilities. Today, it's an entirely different story. The center of a sprawling 13-county market, the Los Angeles Metropolitan Area (Los Angeles and Orange counties) covers almost 5,000 square miles. Los Angeles not only is the heart of Southern California, but it dominates the West. It is a completely self-sufficient metropolitan community almost isolated, in fact, except for San Francisco 400 odd miles north, and San Diego some 100 miles to the south. The Los Angeles Metropolitan Area today is the nation's second largest retail center and ranks third in population, buying power, employment, wholesaling, manufacturing and banking. Moreover, it appears that this is only the beginning. Dr. Robert R. Dockson, Union Bank's consulting economist, who is dean-elect of the University of Southern California School of Commerce, has gained international recognition for his recently published study of this area, which forecasts a population of 10,300,000 by 1975. What does a well established, conservative banking institution do in such a vigorous atmosphere? Certainly, no important business or industry, including banking, could hope to maintain leadership in Southern California without changing and adapting to meet the needs of such circumstances. From its founding in 1914 up until late 1957, Union Bank had chosen to remain a single location bank, headquartered in downtown Los Angeles. By offering a highly personalized service to its customers-primarily in commerce, industry, finance and the professionsUnion Bank was able to grow and prosper through the years despite tremendous competition. Through a streamlined bank-by-mail operation and an aggressive commercial lending program, as well as many other specialized services, Union Bank increased its business at a steady rate until, today, it ranks 58th in total deposits among the nation's more than 15,000 banking institutions. During the post-war period, 19481957, the bank grew at a rate even greater than the average for Southem California banks as a whole, with resources mounting from $157 million to $420 million. While this growth continued at a record pace, Union Bank management became aware that its customers and deposit base were spreading with commerce and industry over the broad expanse of this 400-mile square market. Downtown Los Angeles was becoming more and more remote from the outlying communities which were mushrooming at an unbelievable rate. Distances and traffic were becoming more and more formidable. It was a time for a review of policy and new action. At Union Bank we felt we had to move quickly and intelligently to meet the complex needs of commerce and industry which, in turn, were struggling to serve constantly increasing demands. When Union Bank's board of directors decided to break with its 43-year tradition of one-location banking, it realized the break must be made in a special way. We were faced with some difficult problems.