George Haligowski tells Amanda Barber that changing the focus of his financial institution enabled significant growth.

It takes a lot of nerve to change a 32-year-old financial institution into a professional sales association, but that is what George Haligowski, chairman and president of ITLA Capital Corp., decided to do when he took over the presidency in 1992. With a three-year deadline to grow the company’s finances and take it public, Haligowski believes he had no other choice.

“I was brought in to turn the company around while under the administrative guidance of the FDIC,” said Haligowski. “There were a lot of asset quality problems, but we picked ourselves up off the floor by our bootstraps, positioned the company for sale, and took it public in October 1995.”

At that time, the company was on the NASDAQ and listed $500 million in assets. Today, the company is approaching $3.4 billion and has become a nationwide institution, operating in 26 states. “We raised $50 million in our initial public offering 11 years ago,” said Haligowski. “From there, I expended the company by focusing its direction as a professional sales organization in the commercial real estate and multi-family niche.”

George Haligowski

Reinventing the wheel
When Haligowski became president, he was 36-years-old and had minimal experience in commercial banking. He did, however, have experience in the securities industry. He decided to model the bank’s infrastructure after a security sales organization, putting professional sales staff, rather than bankers, at the pinnacle point in the power chain.

“Our sales people are the professional rainmakers of the company,” said Haligowski. “Everyone, from myself to the receptionist, comes to work and lends to that value chain to ensure the bank is successful in the marketplace.”

He said one of the bank’s biggest problems had been a lack in focus. The bank was trying to be all things to all people, and the asset quality problems it was experiencing reflected that. Haligowski decided to reduce the bank’s service offerings and focus on making sure the professional sales niche was the growth engine for the company. The climate in California at the time made the change in focus an easy one.

“At the time, the FDIC was seizing many professional sales organizations in California, and that left the market open for us,” he said. “We started doing a lot of sales in the marketplace, mostly for repositioning assets. Timing is everything.”

Haligowski realized the extreme change in the company’s focus meant he would have to make extreme changes in his employee structure. Seventeen of the 18 vice presidents at ITLA were replaced during his first six months with the company. He realized it was quicker to replace people then to try to change people. Because the government was breathing down his neck, he didn’t have the time to convince his employees he was doing the right thing. “We had to move quickly to save the company,” he said. “That was the turnaround period.”

ITLA Capital is the 11th fastest growing bank in the US and has been recognized as the 50th most efficient bank in the nation. When Haligowski narrowed the institution’s focus to professional sales, he also put together what he calls a classic distribution set up with regional hubs and smaller sales offices. Rather than incrementally moving across the country west to east, he decided to embark on a bold strategy.

Almost three years ago, he jumped from the West Coast to the Atlantic seaboard, opening offices in Boston, Manhattan, Atlanta, Connecticut, New Jersey, Philadelphia, and Baltimore. “We worked diligently to ensure we replicated our sales culture. We gave the people on the East Coast their own headquarter group, HR people, appraisers, and underwriters so they could support themselves.”

In three years, ITLA Capital grew from seven offices in California to 27 nationally. Haligowski said he maintained a control on quality with the help of the one vice president that made the grade in 1992—Norval Bruce, vice chairman of ITLA Capital. Bruce and his deputy, Phillip Lombardi, developed a team of 50 employees who travel the country, inspecting the bank’s investment properties.

“We have one of the highest rated quality control programs in the US banking culture,” said Haligowski. “We are rated the sixth best in the nation for our level of reserves on our loans.”

Haligowski and his senior management team also take the time to meet with borrowers and inspect properties, allowing them to keep their fingers on the changing pulse of the market.

On December 29, ITLA Capital expects to be listed on the NYSE, a move that shows the company has both grown and stabilized. Haligowski’s next step is to dominate the commercial real estate and multi-family niche in the US. Although many banks decide to grow through acquisitions, mergers, and putting capital in good will investments, Haligowski believes organic growth will be the key to his success.

“Most banks of our size have 50% of their capital in goodwill,” he said. “We only have $2 million of intangible goodwill. When you do things organically, there is no shortcut secret. We’ve grown 600% since going public 11 years ago, and we will continue to be judicious on how we spend money.”