Another bank has moved in on the clientele left shaken by the regional banking crisis. 1st Century Bancorp Inc., a division of Midland Financial Co., the holding company for the largest private bank in the country, MidFirst Bank, is expanding into new markets by hiring 22 former First Republic bankers.
Former First Republic regional managing directors will open 1st Century branches in the South Bay, Santa Barbara and San Diego, and the bank hopes their existing client networks will trust a new, private employer after their former bank sustained a disastrous public bank run this March.
In addition to top directors overseeing new outposts statewide, 1st Century also brings in new vice presidents and an executive, who will work out of its Century City headquarters.
According to 1st Century’s founder and president, Jason DiNapoli, the company has been eyeing expansion for a long time but needed a market opening to justify the cost of growth. With public banks hunkering down under shareholder pressure in an uncertain market, 1st Century found its moment.
“A lot of banks have sort of stopped or maybe retreated,” DiNapoli said. “We see this as an opportunity to grow.”
Another player recently encroached on the West Coast wealthy both First Republic and Silicon Valley Bank left searching for new wealth-management options. Last month, First Citizens Bancshares Inc., the acquirer of Silicon Valley’s assets, announced 11 wealth advisors had moved into the Los Angeles area targeting growing-net-worth individuals.
According to 1st Century’s announcement, the bank looks to attract the same high net-worth deposits that both built and depleted First Republic Bank. The deposits, often well over the $250,000 Federal Deposit Insurance Corp. limit for protection, came from clients like entrepreneurs, real estate investors and private equity players.
While this customer base grew its wealth management practice to $271.2 billion in assets in 2022, the same high-profile clientele withdrew more than $100 billion within a matter of days following Silicon Valley’s collapse in March. This run drained the bank’s last-minute bailout from the private sector and spurred what is now the second-largest bank failure in U.S. history.
Earl Crawford, who served as a senior credit officer on the First Republic executive loan committee, now works out of Century City as 1st Century’s credit executive. It was this loan committee that approved First Republic’s large loan campaign while interest rates were low during the peak of the Covid-19 pandemic. When interest rates jumped last year the value of these loans dropped, scrapping the chance a capital raise could shore up its balance sheet.
DiNapoli believes the bankers he hired did their job well at First Republic and can salvage potential broken trust through the reassurance that his bank’s private status remains immune to public market panic.
“Being private, being out of the news cycle, really made sure we didn’t have the same problems,” DiNapoli said.
Prior to its collapse, First Republic had an expansive network in Los Angeles. The bank had $12.8 billion in deposits in Los Angeles County last year, according to Business Journal rankings.
This exceeded Midfirst Bank’s size nearly seven-fold, as 1st Century’s parent company reported $1.9 billion in deposits in the local area last year.
Midfirst acquired 1st Century in 2016, after the latter grew to a $732 million entity while public on the New York Stock Exchange. 1st Century still operates five branches under its name throughout Los Angeles County.
Lyndsey Hudgins and Linnea McArt joined 1st Century to grow the Los Angeles deposit effort in Century City after long stints as relationship managers for First Republic.
