At the end of 2008, the average American’s idea of a good bank was a sturdy mattress.

But a handful of private equity-backed bank veterans saw an opportunity in the L.A. area’s community banks. They rolled the dice, betting the local economy would rebound and boost local lending along with it. They were right.

Grandpoint Bank in downtown Los Angeles and Irvine’s Opus Bank and Banc of California Inc. are all lenders that didn’t exist seven years ago. Those institutions, built from more than a dozen smaller banks in Los Angeles and elsewhere, now oversee a combined $14.5 billion in assets – or nearly half of L.A.’s largest local bank, City National Bank.

Their founders took advantage of the uncertainty of the financial crisis, snapping up community banks at bargain prices and combining them into institutions large enough to manage the increasing cost of compliance and capable of participating in bigger deals. They’ve been among the region’s most profitable banks, while many smaller banks struggle.

Now, perhaps influenced by the success of some of the early players, investors such as Alex Meruelo are trying their hand at bank shopping today. But they may have a tougher time duplicating the success of the early birds.

Banks are being squeezed by low rates and higher regulatory costs, while the economic recovery has pushed up the price of potential target banks. Small margins aren’t as big of a deal if you’re buying a bank’s balance sheets for a discount – as investors did in 2010 – but it’s a factor when you’re paying market rates.

Those are just a few reasons why Don Griffith, Grandpoint’s chief executive, thinks the window to launch a successful bank roll-up has closed.

“You cannot start today buying banks and get a reasonable return,” he said. “Don Griffith could not go out and raise $400 million today and get any kind of return for my investors.”

Opus Chief Executive Stephen Gordon is also glad he started when he did, before certainty set in and prices snapped back.

“The easy acquisition activity is kind of done,” he said. “As we get further away from the distressed noise, the banking system has woken up.”

Game plans

The 2008 financial crisis threw the entire banking system in a hole, one even lenders with solid balance sheets couldn’t escape.

“It was like a tsunami,” Griffith said. “Banks are like boats sitting in a pond. It doesn’t matter how good of a boat you have, you’re going to get knocked around.”

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