John Black and Brian Horton, two senior bankers from Mellon 1st Business Bank, have branched out on their own with a new bank that opens its doors today serving middle market companies in both Los Angeles and Orange counties.

1st Enterprise Bank, based in downtown Los Angeles, raised $27.5 million from 350 shareholders in an initial stock offering that closed on June 2.

Like many banks that have formed in Los Angeles in the past few years, 1st Enterprise drew twice the level of commitments it needed from investors, who appear eager to get in on the ground floor of a bank in formation.

What sets 1st Enterprise Bank apart from its competitors is its dual focus on Orange County and Los Angeles, a heavyweight management team and a board stacked with seasoned bankers who claim to have deep contacts in both regions.

“We plan to penetrate both of these business markets simultaneously,” said Black, 46, the bank’s chief executive, who formerly served as division president of Mellon 1st Business Bank in Los Angeles. “Many banks have grown too large or have diversified, and have slowly lost their focus.”

Horton, 45, the bank’s president, said he has already recruited a staff to open an Orange County branch in the next few months. As a former division president at Mellon 1st Business Bank, Horton had oversight of its offices in Orange County, the South Bay and Inland Empire.

One of the toughest decisions in opening a bank is finding the right location. 1st Enterprise Bank moved into the old Barker Bros.’ furniture store on 7th Street, across from the Fine Arts Building. A massive steel vault in the bank’s lobby had to be brought in by crane through a window. The bank’s second-floor office overlooks a lobby that was built in the 1920s and is evocative of that era of old money.

Double vision


When Horton and Black left Mellon 1st Business Bank in June 2005, they spent six months recruiting 64 founding shareholders, who are equally divided between Los Angeles and Orange County. Of the 13 directors, six are bankers or former bankers and seven are business owners or professionals, also split between the two regions.

“We made a strategic decision to have not just former bank CEOs but also business executives who have their own spheres of influence in Los Angeles and Orange County,” Black said.

David Holman, the bank’s new chairman, spent 25 years at the Southern California Banking Group of First Interstate Bank before Wells Fargo Bank bought it. He said he was “motivated to put on a tie again” when he saw the financial commitments made by senior managers. Board members own 25 percent of outstanding shares.

The bank also lured another Mellon banker, Jeffrey McGraa, as executive vice president and chief credit officer. Bob Prout, from Commerce National Bank in Fullerton, joined as senior vice president and chief financial officer.

“Many people say that there are so many banks out there, how do you differentiate yourself?” said Holman, 57. “But you really just have to move a little bit of market share.”

Independent business banks in Los Angeles often lure customers from Bank of America, which has 22.4 percent market share in Los Angeles, and Wells Fargo Bank, with 12.3 percent.

One of the primary reasons so many independent banks have flourished is that middle market companies run by entrepreneurs demand a high level of customer service, one of the few areas of differentiation among banks.

1st Enterprise Bank will also be competing against a flurry of banks that have opened in the past few years including 1st Century Bank, formed by industry veterans Dick Cupp and Alan Rothenberg, and Private Bank, led by veteran banker Steven Broidy, a former vice chairman of City National Bank.

“If you compare California with other states, this is a large economy that can still sustain and absorb new entrants into the market,” said real estate veteran Raffi Krikorian, president of Investment Real Estate Associates in Encino and chairman of California Business Bank, which opened last year in downtown Los Angeles and now has $50 million in assets. “The pie really is big enough to split among many banks.”

The past few years have been marked by an unprecedented number of bank openings. Such a surge is typically cyclical and is often followed by periods of mergers and consolidations.

Ed Carpenter, founder and chief executive of Carpenter & Co., an Irvine-based investment-banking firm, has long maintained that Los Angeles is an “underbanked” market with fewer banks, per capita, than any state in the U.S.

“Los Angeles is nowhere near saturation,” he said. “And this is really the first bank to have a Los Angeles/Orange County management team.”