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Sunday, Apr 21, 2024

Bankers Raising Money for Startup

A group of veteran bankers is seeking to raise about $22 million to launch an independent business bank in Encino. If all goes as planned, the bank, California United Bank, would open in the first quarter of next year. It would target the small business market with the ability to provide non-real estate loans of up to $3.75 million and secured loans in amounts of up to $5.5 million to $6.25 million, along with an array of other banking services. “We’re excited to be involved in bringing the bank back to the San Fernando Valley,” said David I. Rainer, president and chief executive officer of the bank in organization Rainer, along with Stephen G. Carpenter, who would become chairman of the new bank, were president/CEO and chairman respectively of an independent also named California United Bank, which was swallowed up in the banking merger frenzy of the late 1990s. Since then, the independent bank sector has continued to churn. As a rule, these types of banks are formed to fill a void for smaller, local banks, enjoy very strong growth, and, more often than not, are acquired after catching the eyes of larger regional or even national banks, creating yet another void for an independent. In October, for example, Encino State Bank, a seven-year old business bank, was acquired by Boston Private Financial Holdings Inc., the holding company for a number of financial institutions including First State Bank of California, which became the surviving entity following the acquisition. When it was acquired for about $33 million, Encino State Bank had grown to three offices with $181 million in assets. Carpenter, a retired banker with some 37 years of experience at banks including Pacific Century Financial Corp, Security Pacific National Bank (both since acquired) and Wells Fargo in addition to California United, and Rainer, whose background also includes US Bank, where he was state president for California, Santa Monica Bank (also since acquired) and Pacific Century along with California United, are well known within the banking community. They built California United from two branches to twenty before it was acquired by Bank of Hawaii. They will be joined by Bruce C. English, former president of Bay View Financial Corp., who will be executive vice president and chief lending officer of the new entity, and Anne A. Williams, former senior vice president and credit risk manager in US Bank’s commercial banking market for California, who will be executive vice president and chief credit officer at California United Bank. “Steve and Dave are very talented, very experienced, very good bankers,” said James D. Hicken, president and CEO of another newly minted independent, Bank of Santa Clarita. “Obviously to raise $25 million you have to have a good story to sell and good connections.” Rainer said the executives were precluded from commenting about their plans while the financial offering is underway. But in the prospectus, the bank lays out a picture of a strong market in the San Fernando Valley generally not served by larger banks. According to the offering prospectus, there are nearly 300,000 firms in Los Angeles County with fewer than 50 employees. Within the immediate area of the bank’s location, there are 3,800 business establishments, more than 80 percent with fewer than 10 employees. “The San Fernando Valley has a large number of small to mid-sized businesses as well as professionals, such as doctors, attorneys and CPAs, who need the personalized and responsive service of a local bank with accessible, top-level decision makers who know the community,” the prospectus states. Most independents, it states, are capitalized to the tune of about $10 million, making them too small to service the majority of small business needs. “Financing businesses at levels between $1 million and $5 million is not well met by local community banks and not pursued by the large regional and super-regional banks,” the prospectus states. The bank executives began a series of presentations this month, offering about 2.5 million shares of stock at $10 per share with a minimum investment of 1,000 shares. The remaining presentations will be held next month in downtown Los Angeles and Orange County. Outsiders point out that the bank’s capitalization plan, along with its growth strategy, are ambitious, but they add that the bank’s officers and founders, along with its board of directors have considerable contacts throughout the community. California United’s board of directors also includes Roberto Barragan, president of the Valley Economic Development Center, Kenneth Bernstein, COO of BFC Financial Corporation of Encino, Robert C. Bills, president and CEO of Valley Presbyterian Hospital and Daniel F. Selleck, president of Selleck Development Group. Another indication that the bank will have no trouble raising the needed funds is the recent performance of the stock market, banking industry executives said. “One of the things we have going for us is the there’s no appreciable gains coming from the stock market,” said Hicken, whose bank ended up having to return some of the funds it raised when it exceeded the levels initially approved by regulators. “People that have invested in community banks across the country have done very well historically.” The bank’s officers, board members and founders are expected to control somewhat more than 32 percent of the voting stock. The bank has already secured a location and plans to employ about 14 workers in addition to the executive team.

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