Banking success stories have different endings: Union Bank buys itself a stake in fast-growing Santa Clarita Valley. (Special Report: The Valley's Top Bankers).

The Santa Clarita Valley's dramatic expansion in both residential and commercial development over the past five years has been good to Valencia Bank & Trust.

Providing many of the real estate and commercial loans that helped fuel the area's growth, Valencia Bank has seen its own overall numbers grow along with its customer base. In 2001, the bank's total assets rose from $221.4 million to $249.6 million while its gross loans rose by 15 percent, from $134.1 million to $154.1 million.

Business was so good, in fact, it caught the eye of Union Bank of California, which earlier this month agreed to acquire Valencia for $62 million in cash and stock. The acquisition paves the way for Union's entry into the fast-growing Santa Clarita and Antelope valleys.

Richard C. Hartnack, vice chairman of Union Bank and head of community banking and investment services, said the Valencia acquisition allows Union to expand into one of the county's fastest growing markets.

"We expect to build upon its success by providing customers with a broader set of financial solutions for their business and personal needs," Hartnack said.

"We like the fact that they stress customer service like we do," said John M. Reardon, president and CEO of Valencia Bank, who is known to deal personally with customers himself on many occasions.

As part of the deal announced Aug. 6, Union Bank will acquire all five of Valencia's branches in the Santa Clarita and Antelope valleys.

Jeri Harman, principal of American Capital Strategies Inc. in Woodland Hills, said Union Bank's acquisition is part of an overall trend in the banking industry to create an instant presence in a new market by way of consolidation.

"It's a move that makes a lot of sense if you want to get a piece of that Santa Clarita market," Harman said.

Lorenzo Flores, regional director for the U.S. Small Business Administration, said Union Bank's acquisition will likely mean more SBA loans to small businesses in the Santa Clarita Valley.

"Valencia has not been a part of our program for years, Union Bank has been starting to do more SBA loans and that is going to help that area," he said.

SBA loans carry low interest rates for small businesses that are guaranteed for up to 85 percent of their value by the federal government.

Reardon said the deal reaffirms his bank's position as one of the fastest growing banks in the northern part of Los Angeles County.

"We always felt that the Santa Clarita Valley would give us the opportunity to grow and grow quickly," Reardon said.

Valencia Bank & Trust was created after Valencia National Bank and First Valley National Bank of Lancaster merged in 1999. It has been at the forefront of development in the Santa Clarita Valley ever since. From 1999 to 2001, revenue for the bank grew from $13.8 million to $18.8 million.

"They're well positioned in an area where growth has been fast and is continuing," said S. Alan Rosen, an attorney and partner with Calabasas-based Horgan, Rosen, Beckham & Coren, who has brokered a number banking deals in the Valley in recent years.

Part of Valencia's success comes from its ability to cater to small and mid-sized businesses, professionals and entrepreneurs who make up much of the area's growing business community, Rosen said.

"They're small, but they can respond quickly to customers' needs," he said.

By pushing its commercial real estate loans, which make up 40 percent of its portfolio, along with its land development, business and residential mortgage loans, the bank has improved its revenue like never before, Reardon said.

"Housing and commercial construction has been really strong in Santa Clarita, and that's been a big plus for us," he said.

The bank uses funds from deposits such as certificates of deposits, money. market and retirement accounts to write a variety of loans.

"Our major growth has been in the deposit area and the commercial real estate area, in particular, both of which reflect a growing customer base," Reardon said. "We feel we're in the right place at the right time and in an area where housing is still booming and retail space is being built."

"When the merger is complete, Union Bank will have a market share in the area that is equal to that of Wells Fargo and one half the size of Bank of America and Washington Mutual," Reardon said.

Union Bank's acquisition could also indirectly help another potential bank startup in that area, Rosen said.

"The success of Valencia was being an independent and giving customers a chance to deal directly with its upper management and decision makers, but that is something that will be lost as a result of this deal," Rosen said.

"A lot of people like dealing with a small bank because of that and it's going to open things up for somebody else to come in up there."