People's Bank of Commerce executives knew they had the perfect location for their new south Medford office, yet they may have underestimated its drawing power.

People's Bank of Commerce executives knew they had the perfect location for their new south Medford office, yet they may have underestimated its drawing power.

During the nine months the three-story brick building on the northeast corner of Barnett Road and Highland Avenue was going up, it attracted more attention than the bank drummed up in its previous 15 years.

"Just the number of people who have taken notice at the traffic light tells us about the location," said Russ Milburn, People's Bank's chief financial officer. "We're really happy about people talking about the People's Bank building. We picked this location because of its visibility. We had to have stoplights, turn-in and turn-out access and no physical median, because if people have to drive around the block they're probably not going to be your customer."

Financial activity quickly exceeded expectations as well. Bank executives anticipated $12 million worth of deposits during its first year, but already the new branch has pulled in $4 million.

Ken Trautman, People's Bank of Commerce president and chief executive officer, said new accounts were opened even before Tuesday's opening.

With the potential addition of two major clients that would add $5 million to $6 million to deposits during the next couple of months, the bank will be well on its way to covering the $5.2 million construction and startup costs.

"It was not necessarily what our plan was," Trautman said. "But I wouldn't be surprised to see us hit $15 million to $18 million during 2013. There are amazing dynamics when you have a head office and a branch in one building. Larger clients want to come in to see lenders, the chief financial officer and other senior officers and then go do their transactions."

People's Bank opened for business on the corner of Biddle Road and Market Street in 1998 and didn't add a second location until 2005, when it moved into Ashland. In 2008, it opened a branch in Central Point.

"We have $76 million on deposit at Biddle Road and that took 15 years," Trautman said. "Long term, I bet in five years this branch could get close to that. The question is how much will come in checks and how much by online banking?"

The bank hired five new employees and transferred 26 from Biddle Road.

Before settling on the 1.2-acre Barnett Road location, bank executives eyed another property, but backed off when landowners insisted on leasing rather than selling. Ultimately, the bank worked out a joint ownership agreement with the principals of the neighboring Medical Eye Center.

The deal required the blessing of both state and federal bank regulators, who wanted to assure conflicts could be settled without impairing bank operations. An agreement was reached in summer 2010, the apartment complex formerly occupying the site was leveled and R.A. Murphy Construction — augmented with local subcontractors — began work on the 20,242-square-foot structure last spring.

"We calculated that even at 50 percent ownership we were saving $200,000 per year over a lease," Trautman said. "The rates and land prices came down, so we finally listened to our own advice and bought."

Executive offices occupy the third story and retail banking operations are on the ground level. The 6,738-square-foot second floor is available for lease.

Milburn said it typically takes two years for a branch to become profitable.

"You have personnel costs plus taxes, utilities and the people to run a new branch," Milburn said. "If you have 100 branches, you're adding 1 percent to your operational costs. If you have three, you're adding 30 percent. Like anything else, growth comes first and income second; you have the growing pains and then you catch up."

An open house is scheduled for Thursday, Dec. 6.

Reach reporter Greg Stiles at 541-776-4463 or email