Last week’s announcement of the merger of Professional Business Bank in Pasadena and Bank of Manhattan in El Segundo marked the emergence of a new force on the L.A. community banking scene: Carpenter & Co.
The merger gives the Irvine bank holding company a significant stake in a community bank with $406 million in assets. Carpenter now rivals downtown L.A.-based Grandpoint Capital Inc. and Irvine-based Opus Bank as an accumulator of local banks.
Local bank analysts say they expect more local merger and acquisition activity from Carpenter.
“This merger provides a $400 million platform for Carpenter to merge other banks into,” said Rick Levenson, president of Western Financial Corp. in San Diego, an investment firm specializing in community banks.
However, Carpenter founder and Chief Executive Ed Carpenter told the Business Journal last week that additional mergers may occur later but are not in the immediate game plan for the merged entity, which will take the Bank of Manhattan name.
“The idea behind the merger is to create a bank with a broader geographic reach and then to grow that bank organically” through new lines of business and taking on additional depositors, Carpenter said.
Compliance and reporting
Carpenter, who is also a banking consultant, said one of the other driving forces behind the merger was a desire to make both banks operate more efficiently, both in their daily work, and in their compliance and reporting requirements.
Last year’s federal Dodd-Frank Wall Street Reform and Consumer Protection Act places a new raft of reporting requirements on community banks to ensure their financial solvency.
“It’s going to be harder and harder for smaller community banks to bear the expense of all these requirements of the Dodd-Frank Act passed last year,” said Bert Ely, a banking consultant in Alexandria, Va. “That’s one big reason why many of the smaller less-capitalized banks are looking at mergers.”
Carpenter & Co. established a community bank fund three years ago and since then has accumulated stakes in a growing portfolio of California banks, including institutions in Costa Mesa, Irvine, Pasadena, San Jose and San Luis Obispo.
Late last year, the company made a play in Los Angeles County, merging the one bank it owned in the county – California General Bank of Pasadena – with Professional Business Bank to create a single institution with assets of $259 million.
Carpenter said his holding company won’t rule out future mergers or acquisitions with the newly combined Bank of Manhattan, though no unions are being planned at present.
Pending regulatory approvals, the merger is expected to close in the first quarter of next year. Shares of Manhattan Bancorp will continue to trade on the Over the Counter Bulletin Board after the merger, according to spokesman Randy Hall. Shares of CGB Holdings, the parent company of Professional Business Bank, do not trade publicly.
Terry Robinson, Manhattan Bancorp chief executive, will lead the combined bank, which will be headquartered in the newly remodeled Bank of Manhattan offices in El Segundo.
In a statement accompanying the merger announcement, Robinson said: “The union of these two Los Angeles banks creates a stronger commercial bank with which to serve small business growth in the Southland and to support continued growth in our mortgage operations.”
Robinson could not be reached for further comment for this report.
Representing the Professional Business Bank side in the new merged bank will be current chief operating officer John Nerland; he will serve as president.
Mary Lynn Lenz, current Professional Business Bank chief executive, will leave the company once the deal is completed. Lenz was hired a couple of years ago to turn around the bank after it had been hit hard by soured commercial real estate and construction loans.
“Mary Lynn is a turnaround specialist who was willing to stay on until the bank was completely turned around,” Carpenter said. “That task is complete and now, once this deal is completed, we will be focused on organic growth. … There will be no shortage of opportunities for her.”
Lenz did not return calls seeking comment last week.
Grandpoint and Opus have gotten attention recently for their fast growth.
Grandpoint, which investor Don Griffith formed last year after his acquisition of Santa Ana Business Bank, purchased First Community Bank of Encino in December and Orange Community Bancorp in August. These and other deals have boosted its assets to more than $800 million.
Opus was recently launched by investor Stephen Gordon in Redondo Beach, though it moved to Irvine last month. Among its recent acquisitions are the parent of Fullerton Community Bank and Cascade Bank of Everett, Wash. Last month, Opus completed a $100 million capital raise to use for more bank acquisitions.
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