By Tiffany Rider - Senior Writer
January 17, 2012 - Jane Netherton, president and CEO of International City Bank (ICB), is regarded as one of Long Beach’s most established businesspeople and community advocates. Since taking the helm at the bank in 1986, Netherton has continued to build a strong team of professionals to support the management and operations of ICB while prioritizing the safety and soundness of the bank.
Netherton began her banking career as a teller trainee with Crocker National Bank in 1967. She never earned a college degree, but took courses in banking and economics while doing a lot of reading and self-teaching. Netherton said she did this because her plan was to work and she wanted to be more than a teller.
Netherton worked her way up through various departments at Crocker, until she was recruited to be the operations officer for a new community bank in Long Beach: Harbor Bank. Thirteen years later, Netherton left her role as a vice president and chief financial officer at Harbor Bank to take the president/CEO position with ICB. The bank, at the time, was very small, she said. Using her knowledge of community banking and customer service, Netherton has grown the bank and maintained a strategic plan for the institution’s future growth.
ICB is a business bank that serves small and medium-sized businesses with commercial lending, Small Business Administration lending, lines of credit, equipment financing and some individual accounts for business clients. The bank does not have a portfolio for home, auto or consolidation loans.
Netherton has long been active in the community, serving in leadership roles for numerous organizations, including Special Olympics, California State University, Long Beach, the Long Beach Redevelopment Agency, the Long Beach Area Chamber of Commerce, the Rotary Club of Long Beach, the Conservation Corps of Long Beach, the Long Beach Convention & Visitors Bureau, the Downtown Long Beach Associates and many more. ICB is also the name sponsor of the annual Long Beach International City Bank Marathon.
In this interview, Netherton discusses the financial meltdown of the industry, the stability of the bank, her perspective on the overall progress of the City of Long Beach and her take on the demise of redevelopment agencies.
LBBJ: Several years ago, Long Beach had eight independent headquartered here. Many of those banks have since merged or closed. What is it about ICB that has helped the bank stay in business for more than two decades?
Netherton: We have not gone out and tried to be everything to everybody. We’ve been true to ourselves that way, and involved in the community. The board of directors is wonderful. They are very supportive. Although we have taken our hits, we have stayed within the means of the bank. ... There are two business clients that we have lost. We have transitioned a couple of businesses out of the bank because they got larger than we could handle from a loan standpoint, but they keep some of their balances with us. Other than that, people just haven’t left the bank. That’s very gratifying.
LBBJ: How is the bank’s financial soundness today, in terms of assets and loans?
Netherton: The past three years have been pretty ugly for us. The good news is we are still here and are very liquid. We have always maintained more than double the capital requirements. We have never been under any capital or liquidity pressure. ... We did a lot of construction lending in 2005 and 2006 that held over to 2007, 2008, 2009 and 2010. The good news is that, although it was a big blip on our sheet, it didn’t impact our stability. We thought 2011 would be our year for turning the corner for profitability, but what we found was that the economy did not get as good as we hoped it would be. So we stayed flat. We had a lot of clients that, although we thought they would be able to hold out going through 2009 and 2010, were really suffering in 2011. ... However, from a capital and liquidity standpoint, we are fine.
This will be our year of profitability. We have started making loans. We restructured our strategic plan and balance sheet. Our senior management team sat down and decided we really want to bring on a couple more loan officers. We wanted to jumpstart the lending program for 2012, and we have done that. We have a great pipeline of new clients that are bringing good relationships beyond just loans. We are being as aggressive as we can be while still making certain that we are protecting the bank’s assets. We’re not making risky loans just to get loans on the books, but we are looking at the small businesses that could use assistance.
LBBJ: What measures has the bank taken to weather the Great Recession?
Netherton: We’ve shrunk the bank. We had some problem assets that we got rid of. We did not go out and market for new clients and new loans. Unlike most banks, we didn’t take any TARP (Troubled Asset Relief Fund) money. I’m glad we didn’t. There are a lot of banks that took TARP money that are no longer around. ... I believe the government mishandled the financial bailout to the extent that a lot of banks that got TARP money, ... [and weren’t] going out and making new loans, which was the whole idea of providing some additional capital base – to get the economy going.
We worked with some of our customers when the regulatory agencies wanted us to be a little more hard-nosed on things. We had customers that had been with us for a lot of years who were suffering ... some asking for interest-only loans for a year. When someone is on interest-only, or their cash flow isn’t sufficient to meet the criteria for the loan standards for the OCC (Office of the Comptroller of the Currency), the regulators make you put reserves against that [through troubled debt restructuring]. All of that does impact your bottom line. Even though we got beat up a little bit by the regulatory agencies for some of that, those same companies are still in business and they are now showing cash flow. They are back to doing business the way they did it three or four years ago. They ... are still with us. That means we didn’t close businesses down. A lot of these were Long Beach businesses that have been around for 30 and 40 years. We are here today, glad we did it ... [because] we believe we did the right thing for the business community.
LBBJ: Many people blame the banking industry for the financial meltdown. As a banker, how do you react to their frustrations?
Netherton: I don’t believe that we are the cause of the meltdown. I am talking as a community bank; I have a whole different perspective than someone speaking as a large bank like a Bank of America or Wells Fargo. We were here and worked with small and mid-sized businesses to keep them going. I do believe that parts of the financial industry got greedy, that they didn’t really think that [the financial] bubble would ever burst. People just thought that they would make it big while they could and then just wait to see what happened down the road.
When I looked at the Indy-Macs and the Washington Mutuals, they had falsified applications to make loans. That is where I think the real problem was. Also, I think for the regulatory agencies that [eventually] got beat up by Washington, everything was going well. They were making money; there were no delinquencies, so they just thought things were good. When they got hit hard for letting this happen, they reacted in a way that was an overreaction. ... [But] I think banks today are saying slower, organic, stable growth. Doing more stress testing and more reserve analysis. That’s a good thing.
LBBJ: Though less than one-third of the Restoring American Financial Stability Act of 2010 has been implemented in the past year and a half, do you feel banks have already come under too much regulation?
Netherton: I do. [Though] I think there is probably a lot of the Dodd-Frank bill that should be out there, the biggest issue with this is it may be imparted to the regulatory agencies, but when it gets down to the local level and the oversight of the examiners, it is not the same as what is being said in Washington. We have a good relationship with the people who come in the bank and examine us, but it is very subjective. If I have three examiners here and have three different examiners next year, they will have a different opinion on what was examined the prior year. ... So the T gets crossed twice rather than once. I think there is some overregulation or even stricter oversight than what was even intended by the regulation [being enforced] by the on-site local people. I think there is some disconnect between what is being said in Washington and what is actually being done.
LBBJ: Do you feel that the new law’s regulations regarding “too big to fail” – which would use an established pool of funds from bank monies to support a failing bank as the government liquidates the institution’s assets – adequately addresses the issue?
Netherton: I really do not believe that anybody should be set up to the point where they can do whatever they want and get bailed out. The concept of that bothers me. However, I do understand the global economy enough to know that a “too big to fail” scenario is probably necessary. It would be disastrous for a Bank of America or Wells Fargo to go down. From national economics to international economics, it would be tough. I understand we’ve put ourselves in a position to where too big to fail is almost necessary. I wish it wasn’t, but it is. I hope the oversight agencies really look hard at the accountability of the management of the large institutions and how they handle their balance sheets to make certain that they are doing whatever it is they can do to reduce the risk of the banks.
LBBJ: If there were one piece of the financial reform legislation that you could amend to better support the banking industry locally, what would it be, and why?
Netherton: There isn’t a piece of the legislation that I would point to, but I would say that for the introduction of legislation that changes how you either account for something on your balance sheet or how your balance sheet looks in general, they do not allow banks enough time to comply. If you have done something for 10 or 12 years a certain way, and they say you have six months to fix it, it doesn’t always work that way. It may take a year or two or three. I think that as long as a bank shows they’re working toward resolving the issue, they should be allowed more time to do that.
LBBJ: ICB has contributed to the local community in a variety of ways, including serving as the name sponsor of the annual marathon. What are some of the bank’s other charitable contributions to Long Beach?
Netherton: Being a sponsor of the marathon, which is not a not-for-profit, is something we thought was good for the City of Long Beach because it brings people to town and there is economic value to it. It gives the city positive exposure, and we only did it because I really respect its CEO, Bob Seagren. ... The other charitable contributions are not at a level where we are named in anything. I was a founder of the Conservation Corps of Long Beach, and we support their programs. We have supported almost all of the arts in a smaller way ... including International City Theater ... Musical Theatre West ... [and] the Carpenter Performing Arts Center. I am on the board of Special Olympics of Southern California, so we do support that. I put a lot more time into that because I have a special needs son, so that is something more personal for me than for the bank. I also chair its annual fundraiser in Long Beach. Those are just some of the contributions we make to the local community on an ongoing basis.
LBBJ: Since you’ve been involved in the local community for a number of years, do you feel the city is moving in the right direction?
Netherton: The city has made some headway over the past 10 years, but I think the city is still not as business friendly as it could be and should be. I think a lot of that has to do with having nine council districts, with each one looking at the specific needs for their own district and not looking at the city as a whole. I think sometimes that hurts us.
What has happened that has been very positive is the renovation and revitalization of the general downtown area. I’ve been really involved in that between the DLBA (Downtown Long Beach Associates) and working with Steve Goodling at the Long Beach Convention and Visitors Bureau (CVB). He has been a leading force. ... What the CVB brings in is huge to the city. It generates over $16 million a year to the general fund. ... But, overall, have we come to a point where I could actually say that we are a business friendly city? The answer would be not yet. We are working toward it.
I will say that this redevelopment issue that our “wonderful” governor has handed down is devastating to the city. Having been on the redevelopment board, I [realize] ... people don’t understand that when you work with private developers and redevelopment, you’re building a product and creating jobs and a future with that.
[Assemblymember] Bonnie [Lowenthal’s] district fought to have an affordable housing project be the key starting point of the redevelopment on the Westside. How does the same person, who watched what redevelopment can do and has done, be a proponent of taking it away? That appalls me. And Alan [Lowenthal] ... every time he has voted in Sacramento it has been an anti-business vote. The Lowenthal “dynasty” has to go away. When I asked Bonnie at an event how she could have done this to redevelopment, after seeing all of the benefits of the program, her answer to me was, “I’m in a different place now.” What that said to me was that she’s union-backed. I am just so upset that Alan and Bonnie Lowenthal could have done this when they know the benefits of redevelopment here. We had a huge redevelopment area. They gave it away. If we talk about blight, we can thank the Lowenthals.
LBBJ: Is there anything else you would like to add?
Netherton: Even with what I said about the city, I love Long Beach. I live here and work here. I’ve been here for 49 years. I love it here. I don’t know of any other place I’d rather be. There’s no other place I’d rather work than in Long Beach. I am first committed to having this bank be a cornerstone of the business community. We are halfway between the other big areas in Southern California, and I think we are positioned to really take off and be a true destination.