Kummer plays the optimist and First Business pays off.

Kummer plays the optimist and First Business pays off BY KATH M. KRISTOF

Robert W. Kummer Jr. was born to be a banker. Even in his youth , he won bank-founded scholarships and showed a propensity for finance and organization.

Now at the helm of one of Los Angeles' largest and most successful independent banks, Kummer shuns false modesty. The chairman and chief executive of $346 million (assets) First Business Corp. thinks he is operating one of California's leading financial institutions, and he's no too shy to say so.

"There is practically no bank in the state that can match this bank's performance in its first six yers," says Kummer, who attended college on a scholarship funded by George F. Baker, a former chairman of First National Bank, which was later folded into Citicorp. "We are kind of held up as a model of what other independent banks should be."

That is fact, not bragging, says Kathleen

That is fact, not bargging, says Kathleen Smythe de Urquieta, a corporate finance executive at Montgomery Securities in San Francisco. Conservatively speaking, Kummer's banking company -- it is the parent of Los Angeles-based First Business Bank -- is among the three most successful business banks in the state, Smythe de Urquieta says. She knows becase Montgomery ranks 28 of the state's top performing banks, and First Business is near the top of her lists in six out of 10 categories.

"When you look at a bank in terms of an investment, you always look for the downside," she says. "As far as I can tell, First Business dosen't have any downside."

Such praise precludes "awshucks" shyness from Kummer, who says he won his title in a coin toss. Both he and Joseph P. Sanford, First Businesses president, wanted the title of president. Kummer lost.

Kummer, a one-time football coach, sets the direction for his bank. But he is quick to note tha the doesn't desrve all the credit for his bank's success. Kummer likens the bank's day to day operations to that of a partnership where Kummer, Sanford and executive vice presidents Thomas F. Savage and W. Peter Bohn have nearly equal say. Weighty decisions ae debated, with soft-spoken Sanford sometimes taking a back seat to more boisterous members of the team such as Savage and Sanford.

During Wall Street's worst week, for example, Sanford and Savage strode into Kummer's office to discuss the advantages of buying mortgage-backed securities during what they anticipated would be a period of declining interest rates.

Sanford, who is described by many who know him as First Business' nuts-and-bolts realist, decided the company should take quick action to lock in high-yield investments while the rates were still high. (When the stock market goes sour, investors transfer funds into more secure investments such as government-backed securities and bonds. The yield on these investments falls as demand increases.)

Kummer, who calls himself an optimist, contended that the crash was a temporary correction. "I would be very surprised if in 30 days it wasn't business as usual," he says.

Meanwhile, Savage was convinced that the stock market activity was sign of impending recession.

"The market is telling us something," Savage warned. "There's going to be a recession."

Kummer countered: "Keep saying that, Tom, and sooner or later it's going to happen. Sometime within the next 100 years."

"No, I'm telling you, the market is giving us a message," Savage asserted, adding ominously, "Just wait until Fd Funds are down at 4 percent."

Sanford calmly interjected, "Well, I think we need to do something pretty quickly."

In the end, the plans of Sanford and Savage were altered. But all three executives seemed satisfied that the actions they took would benefit First Business in the end, regardless of their varying projections about the future of the economy.

All that aside, First Business does not operate by committee, Kummer says.

Kummer, quite proudly, notes that his company is much like the comapnies it caters to. It is a small, entrepreneurial enterprise. How does First Business' impromptu management meetings differ from those of a committee?

The entire process, which a bank director calls typical of the way decisions are made at First business, took something under five minutes.

"They don't attack a problem, they surround the doggone thing," says Roland Seidler, chairman of Seidler Amedic Securities Inc. in Los Angeles and a First Business director. "They've got a quadrangular approach to problem solving that works very well."

The bank's decision-making foursome was a planned affair from the very beginning, Kummer says. All four executives were working in senior positions at Los Angeles-based Union Bancorp. in the early 1980s when Kummer decided there was a need for a new bank to serve small companies.

Big banks were ignoring the so-called "middle market" to an ever increasing degree, says Kummer. hat opened up a market niche for these Union bankers, who just happened to specialize in middle market -- small business -- lending.

Banks the purport to cater to this market in Southern California, a small business haven, are common. But what makes Kummer's bank special is that it has never deviated from its chosen path. While some so-called middle market banks also cater to doctors, lawyers, accountants, and other wealthy individuals, First Business is interested exclusively in corporate finance. The bank will only make personal loans to top offers of companies first Business finances, in fact. Other prospective customers need not apply.

That direction, which other bankers contend is spearheaded by Kummer, keeps first Business in the money. Earning $2.2 million in the first nine months of 1987, First Buiness has already exceeded its record full-year 1986 profits. It has als paid off for the 51-year-old banker. Kummer earned more than $200,000 in 1986, according to the company's recently published proxy statement. And Kummer's stock in First Business is now worth about $2.5 million, roughly five times its value when the company opened in 1981.

Photo: Journal Snapshot

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Photo: Kummer: 'We are kind of held up as a model'