Shuttered bank branches have been turned into fancy restaurants, boutique hotels, community centers and funeral homes across the nation. But in the San Francisco Bay Area, a handful of banks are bucking that trend as they open new offices to provide in-person services.
Some financial institutions are seeking to compete for the business of tech start-ups and other companies in Northern California that were left adrift by the failures of Santa Clara-based Silicon Valley Bank and San Francisco-based First Republic in 2023.
Among those adding offices is Five Star Bank, an institution that entered the Bay Area last year by opening a downtown San Francisco branch. In addition to those offices on the 28th floor of 345 California St. — where it recently expanded to 6,635 square feet — Five Star is planning to open its second branch in the San Francisco Bay Area, in the bustling East Bay suburb of Walnut Creek.
In March, investors opened Altos Bank at 467 First St. in Los Altos, making it the region’s first community bank to open in almost 20 years. Tri Counties Bank, based in Chico and billing itself as "California's Local Bank," hired several veterans of First Republic and aims to establish a private banking service focused on the Bay Area. And Central Valley-based F&M Bank, formally Farmers & Merchants Bank of Central California, plans a second East Bay Area office next year in Walnut Creek.
In addition to competing with one another, these banks are contending with a widespread shift among consumers to digital banking that could hinder foot traffic. That's one reason the number of bank branches nationwide has steadily declined each year since 2011, as U.S. banks focus instead on building their online banking platforms. Since Jan. 1, 2022, more than twice as many bank branches have closed than have opened, according to FDIC data.
Five Star, however, is banking on its strategy of building the kind of one-on-one relationships with clients “where you know your banker and they know you,” CEO James Beckwith told CoStar News. “There is no substitute for having a physical presence."
Personal touch
Five Star Bank, headquartered in the suburbs of Sacramento, plans to open a full-service branch this year in a 4,128-square-foot space at The Plaza, an office building at 1333 N. California Blvd., Walnut Creek. The office would serve the commercial bank’s “growing portfolio of clients in the region, ranging from family-owned businesses to professional service firms shaping the local economy,” Five Star said in a statement. The bank noted that the space would also house its growing team of about 35 employees across both offices.
“Fueled by post-pandemic migration and a vibrant small business sector, Walnut Creek has experienced steady commercial growth and rising demand for high-tech and high-touch financial services,” Executive Vice President and San Francisco Bay Area President DJ Kurtze said in a statement.
Five Star caters to business owners, real estate investors and others seeking a high level of customer service that just can't be provided by a chatbot. In fact, a number of the bank’s clients have the CEO’s cellphone number.
Clients include the Bay Area Italian American restaurant chain Original Joe’s and Calicraft Brewing Co. as well as the San Francisco Bar Pilots, a group of professional mariners specially trained to steer hulking commercial freighters in and out of local waterways.
Five Star opened in 1999 and spent much of its history focused on the Sacramento-area markets. But in the summer of 2023, just months after the collapse of Silicon Valley and First Republic banks, it announced it was expanding into the Bay Area, adding more than 20 bankers to its San Francisco Bay Area team, many of them senior bankers who had already built trust and relationships with clients in the area.
Competitive environment
Out-of-state banks have also opened branches in California's Bay Area to fill the void in regional banking that opened in 2023.
Long Island, New York-based Flagstar Bank, which already has branches in Palo Alto and Walnut Creek, recently announced plans to boost its Bay Area presence with a branch at 300 California St. in downtown San Francisco, according to the San Francisco Business Times.
And the nation’s largest bank, JPMorgan Chase — the buyer of First Republic bank following its collapse in 2023 — said in April it was expanding its San Francisco headquarters by leasing an additional 65,000 square feet at 560 Mission St. The expansion at the 31-story building known as the JP Morgan Chase Building, where it has occupied space for more than 20 years, brings its total there to 280,000 square feet, with space for some 1,600 employees.
JP Morgan pitched the move as part of a larger effort to help “revitalize the city’s core by attracting top talent and boosting the local economy.”
Silicon Valley Bank’s woes marked the second-largest banking collapse in history, behind Washington Mutual's in 2008. Now operating as a division of First Citizens Bank, it is once again riding high, with a long list of clients in the start-up world and a large office in downtown San Francisco.
“It’s a competitive environment, but we jumped into the Bay Area with both feet,” said Beckwith, the Five Star CEO, who grew up in the region and went to San Francisco State University.
He views the bank as playing a key role in revitalizing San Francisco and the rest of the Bay Area after the especially hard toll the COVID-19 pandemic took on its economy.
“We are part of the healing process,” he said.