Two banks that planned to open this year probably won’t do so, thanks to the lousy economy and overburdened bank regulators.
The problem for Manchester Financial Bank is a major hit that owner Doug Manchester has taken in his stock portfolio.
Meanwhile at Gateway Pacific Bank, its president simply quit to return to his home in Utah.
Manchester, a major hotelier and developer, was supposed to invest $19 million of the $20 million in capital needed to launch the bank. However, because of major losses his portfolio took in recent months due to the plunging stock market, he is now putting up about a fourth of the total, about $5 million.
The bank is talking with private equity firms for the remaining investment, said Rick Mandelbaum, the bank’s president.
“You and I and others who have 401(k) retirement plans have seen how this market has hurt them. He’s going through this as well. It’s just on a different level,” he said.
According to securities filings, during August, Manchester invested approximately $5.5 million into NextWave Wireless, a San Diego maker of wireless software.
The 800,000 shares of NextWave Manchester purchased in seven separate buys averaged $6.83 per share, SEC filings show.
As of Oct. 29, the stock was trading at 22 cents, making his stake worth $177,000.
Manchester Financial Corp. also owns several hotels and resorts, and is part owner of Broadcast Co. of the Americas, which operates several San Diego radio stations.
Mandelbaum said the bank received approval from the FDIC earlier this month, and had approval from the Office of the Comptroller of the Currency to organize the bank.
He was optimistic the capital would be raised, and that the bank would open in the first quarter of 2009.
Regulatory delays may be the cause for Gateway Pacific in National City not opening this year.
Garry Barnes said he resigned as president of Gateway Pacific Bank a month ago to “semi-retire” in Salt Lake City. He had been leading the organizational effort for two years.
“The delay (in obtaining approvals) had nothing to do with the bank’s management or the investors. The FDIC has been busy rescuing other banks, and obviously that is a higher priority than approving de novo banks,” Barnes said.
He said his home was in Utah, where his wife owns a business. He said he prefers living there. “I’m going to do some teaching, and writing, and making up for a lot of ski time that I lost,” he said.
Calls to Gateway Pacific Chairman Alex Carolino, a mortgage broker, were not returned. Among the bank’s board members are Hal Brown, a former college professor; Ed Plant, a businessman; and Nick Inzunza, former mayor of National City.
The bank was aiming to serve National City and the South Bay.
In July, Vibra Bank opened its doors in Chula Vista, the sole new commercial bank started in the county this year. Bank organizers raised about $14.7 million in capital for the single office bank that targets Latino businesses and customers.
Mike Perry, chief executive at San Diego Trust Bank, said even if a new bank obtains all its regulatory approvals, raising money from investors now may be problematic.
“This is not the market that people are lining up to invest in a bank,” Perry said. “A brand new bank will have trouble getting new business, especially with the economy sliding downhill as it has.”