New York is the nation's No. 1 financial center. What's No. 2? It's not Chicago: It's the Los Angeles area, which serves the nation's second largest concentration of population, business, and industry.
Moreover, Los Angeles shows no signs of giving up its second place.
Key banks headquartered here not only have expanded throughout the state, but around the world, spurred by growing international trade, especially around the Pacific.
Four of California's top banks are based in Los Angeles. They are Security Pacific National Bank, United California Bank, Union Bank, and Lloyds Bank California.
The nation's largest, Bank of America, calls San Francisco its home. But it maintains southern California headquarters in Los Angeles where its chairman is based. And most of the Bank of America's 1,100 statewide branches are in the southern part of the state.
Other major San Francisco-headquartered banks recognize the importance of Los Angeles, too. Wells Fargo Bank recently moved its chairman to Los Angeles. Crocker National Bank's chairman usually spends half his week in Los Angeles and Crocker's vice-chairman recently was shifted here from San Francisco.
Total bank deposits in southern California -- location of 2,220 bank branches -- swelled to $52.6 billion, or 58 percent of the state's total, in 1978 (latest full year in which figures are available) from $44.8 billion or 42 percent of California's total in 1977, says Richard W. Ayer, vice-president, research department, Security Pacific. Bulk of the deposits originated in Los Angeles County, which accounted for $30.5 billion in 1978 and $30.1 billion a year prior , Mr. Ayer adds.
Another key component in the financial sector is the savings-and-loan industry, largest in the nation in terms of outlets and savings dollars. Eight of the state's 10 largest associations, including Home Savings and Loan Association -- No. 1 in the country -- are headquartered in the area.
Southern California accounts for 1,519, or 57 percent of the total, savings-and-loan offices in the state and, at year-end 1979, 8.5 million accounts representing 64 percent of the California total and $56.2 billion, or 67 percent of savings balances. Savings dollars in the southern sector were up about $7 billion from a year earlier.
Credit unions are becoming a growing force. Of the state's 1,663 credit unions, southern California accounts for almost 1,000 with a total of 2.5 million members and $5 billion in deposits (shares).
Financial institutions here are more deeply involved with consumers than any other section of the country. With household incomes expected to climb to more than $40,000 by the end of this decade, from almost $30,000 now, "the consumer can and will continue to provide a tremendous and growing market for bank services," says Eric P. Thor Jr., vice-president and senior economist, Bank of America. Consumer loans, he adds, are up 25 percent from a year ago.
In southern California consumer and real estate loans during 1979 climbed while commercial loans have been declining, notes Richard W. Ayer of Pacific National Bank, Los Angeles. In mid-1979 consumer loans reached 30.1 percent of total loans outstanding from 27.4 percent a year prior and 25.7 percent in 1977, while real estate loans rose to 28.7 percent from 25.4 percent in 1978 and 25 percent in 1977, and commercial loans fell to 41.2 percent last year from 47.2 percent in 1978 and 49.2 percent in 1977, observes Mr. Ayer.
In efforts to reach those consumers, banks and S&Ls stress convenience: outlets in or close to shopping centers, more use of automated teller machines (ATMs), and financial transactions by telephone.
The 28-office Valley Federal Savings and Loan Association, Van Nuys, operates three satellite offices -- compact, manned facilities -- in or adjacent to supermarkets. They are open seven days a week, 10 a.m. to 7 p.m. "All are doing extremely well," says Robert E. Gibson, president of the firm, in bringing "our business to clients who ordinarily wouldn't frequent the normal office."
More ATMs, providing 24-hour service for deposits and withdrawals plus other basic transactions, are being installed. Four of the state's top banks -- Bank of America, Security Pacific, Crocker National, and United California -- by year end plan to have a combined total of 300 to 400 ATMs in action, about half of them in southern California.
Independent banks, competing with the statewide giants, are adding ATMs, too. Seventeen independents with 45 ATMs are linked statewide in an "Instant Teller Network" managed by City National Bank, Beverly Hills. That network is expected to grow to 27 independents with 108 ATMs on line by Oct. 1, making it the largest ATM independent network in the nation. Customers of a participating bank can utilize the ATMs of others on the network.
Crocker National recently unveiled its first bilingual ATM at its Alhambra office. The machine gives instructions in both Spanish and English on a lighted display and on the keyboard. It also dispenses bilingual transaction records.
ATMs also will be getting a big play at savings-and-loan associations. Raymond D. Edwards, chairman, Glendale Federal Savings and Loan Association, and president of the California Savings and Loan League, says S&Ls will be "part of a card system in which customers will have access to funds through ATMs and purchases can be charged against accounts."
Most major S&Ls offer telephone transfer accounts that allow switching of funds between S&L savings and bank checking accounts. This involves S&L staffers as intermediaries who handle the paperwork in the transactions between financial institutions.
Allstate Savings and Loan Association, Glendale, has gone a step further. It was the first S&L to offer automated bill payments via telephone.