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Friday, Jun 14, 2024

Finance Regents, Discovery Valley banks begin operations

Banker Says Interest Rate Cuts Doing

Little for Economy

All things considered, this isn’t the best time to open a bank; but don’t tell that to the organizers of two new San Diego community banks that opened last week.

“Obviously, it’s an unusual time to open any kind of business (given the terrorist attack of Sept. 11), but I think that as we get down the road over the next few weeks, things will gradually resume to normal,” said Dan Yates, CEO of Regents Bank, which opened for business Sept. 18 in La Jolla.

With final regulatory approvals in hand earlier this month, the bank could have opened earlier, but officials decided to hold off its “soft” opening at 875 Prospect Street. They plan a grand opening sometime in November, about the same time it opens a Downtown office in the Koll Center at 501 West Broadway.

Despite the terrorist attacks, the biggest one-day points drop ever in the Dow Jones Industrial average, and an economy verging on a full-scale recession, the mood among prospective customers is optimistic, said Jim Kelley, CEO of Discovery Valley Bank in San Marcos.

“Most of the people we’ve talked to are intent on getting on with business, and not letting (the attacks) sidetrack them. A lot of people now feel that we have a purpose,” Kelley said.

The founders of Discovery Valley took only about 90 days to raise nearly $8 million in capital to launch the bank, which is located at 1145 San Marino Drive, Suite 346, just across the street from the Quails Inn.

Board members, founders and employees numbering about 20 put up about 40 percent of the total capital, while the rest came from some 280 local investors, mainly residents of San Marcos, Carlsbad and Escondido, Kelley said.

Both Regents and Discovery Valley expect to capture a good amount of business from former customers of such community bank stalwarts as North County Bank, Grossmont Bank, Scripps Bank, Peninsula Bank of San Diego, Bank of Commerce, and Valle de Oro, all of which were acquired by much larger banks in recent years.

“Ever since we filed our application to start the bank, there’s been no shortage of interest in our effort. I’ve been getting lot of inquiries about when we’re going to open and now I can finally tell people when that is,” Yates said.

Regents Bank investors raised about $12.5 million, using $10 million of that to capitalize the bank, and the balance for the bank’s parent firm, Regents Bankshares Inc.

Regents Bank’s board is headed by Thomas C. Young, the former director of the Portland, Ore., branch of the Federal Reserve Bank of San Francisco. Other directors include Bill Nelson, former chairman of Scripps Bank; Roger Joseph, CEO of Franklin Croft, Inc.; Bill Roper, executive vice president of SAIC; and Pat Shea, CEO for San Diego Air Commerce Center.

Discovery Valley’s board is chaired by John R. Plavan, chairman of Plavan Petroleum Inc. Other members include Robert Cairns, partner in Cairns, Eng & Applegate, LLP; Gabriel Castano, owner of North County Supply; and Michael Lenzer, owner, Life Medical Pharmacy Inc.

Yates has a 20-year track record in banking, previously heading up the local office of Los Angeles-based First Business Bank. He’s also worked for BofA, Manufacturers Bank and Union Bank of California.

Kelley was involved in the formation of Rancho Bernardo Bank in 1997, and has worked for Grossmont, Bank of California, and California First Bank. He began his banking career in 1979 with San Diego Trust & Savings Bank.

Discovery Valley’s new office is in the same commercial center as First National Bank of North County, a $70 million bank that also caters to small- and medium-sized businesses.

CEO Bob Hahn of First National said the competition would be challenging, but felt there’s plenty of business for the new community banks.

“I’m convinced that the concept of big banking is not what most small businesses want. Community banks have a niche to fill that is continually being left by the larger banks and savings and loans.”

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Rate Cuts Not Enough:

The eighth interest rate cut by the Federal Reserve Bank was expected and has had little impact on the now precarious national and regional economies, says CEO David Blackford of California Bank & Trust.

“We’ve had 300 basis points of interest rate reductions so far this year, and this one makes a total of 350 points,” Blackford said. “But for real positive reaction to occur will require stimulus by the government.”

Specifically, Blackford is looking for some capital investment initiatives along the lines of cutting the capital gains tax and an investment tax credit.

The interest rate cuts haven’t generated much business for California Bank & Trust, and the latest one won’t make any difference, he said.

“The demand for business and development (loans) has been declining all year,” he said.

Kurt Chilcott, president of CDC Small Business Finance, said although he’ll have a record of more than 300 transactions this year with a dollar amount totaling about $130 million, the latest cuts were merely symbolic and have practically no impact.

Chilcott and other lenders worry about the future if the economy continues to slide.

“We have a low default rate right now but I wouldn’t be surprised to see that go up,” he said.

CDC makes SBA-backed 504 real estate loans that require a conventional first mortgage and average about $450,000.

Huntington Capital Funds Mattman:

Mattman Co., a San Marcos-based customized vehicle firm, received $750,000 in funding from Huntington Capital, a San Diego small business investment company.

The package provided to Mattman included $500,000 in mezzanine debt financing, which the company will use for general operations, and $250,000 in preferred equity funding.

Mattman builds sophisticated surveillance vans, armored vehicles and customized vans for law enforcement and commercial purposes. Clients include city police departments of Los Angeles and San Diego, the FBI, banks and medical centers, and foreign companies, according to Huntington.

“This funding allows us to go after larger contracts, increase our production capacity and concentrate on continued growth,” said founder John Mattman.

Huntington Capital, which received its license as an SBIC from the Small Business Administration in January, targets non-high-tech companies in Southern California that have been in business at least two years with revenues between $2 million and $15 million.

– – –

San Diego National Opens Office:

San Diego National Bank opened a new office in Point Loma at 1075 Rosecrans on Sept. 17, bringing the total offices to 16 in the county. The bank, a subsidiary of FBOP Corp. of Illinois, is managed by Raymond Simas and the second new branch opened this year.

SDNB also hired Pamela Bogosian, with more than 20 years in financial services, as assistant manager.

In The Neighborhood:

Neighborhood National Bank held a grand opening of its new National City office Sept. 19. San Diego’s first and only nationally chartered community development bank also keeps its administrative office at the 1717 Sweetwater Road address at National City, and operates another office in 3511 National Avenue in San Diego.

– – –

Mendez Elected:

Anna Mendez, Mission Federal Credit Union’s senior vice president of lending, was elected president of the San Diego Mortgage Bankers Association.

Mendez has been with MFCU since 1991. She also is involved with San Diego Regional Partners in Homeownerships and other organizations in the real estate industry.

Send any finance news to mallen@sdbj.com or fax to (858) 571-3628.


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