Fund Takes Calif. Bank Stake, Eyes Multibank Holdings

A San Francisco-based investment partnership is taking its first ownership stake in a California community bank. Belvedere Capital Partners, headed by two former regional bank executives, has committed itself to invest up to $5.5 million in Fullerton- based Security First Bank through a new $75 million hedge fund that is to acquire significant positions in community banks. The stock and convertible debenture purchase would give Belvedere and the fund at least a 43.5% stake in the $35 million-asset bank. Officials at Belvedere now hope to use the stake as a launching pad for turning the fund into a multibank holding company that would control community banks in attractive markets statewide. Already, officials are looking at "two to three" other possible targets. "This investment is the first step in gaining a presence in the expanding markets of Southern California," said Richard W. Decker Jr., president and chief executive officer of Belvedere and former chief operating officer of First Interstate Bancorp, Los Angeles. "We like Orange County. We like the growth aspects of Southern California." The capital injection breathes new life into Security First, formerly known as Pacific Inland Bank. The 13-year-old bank, which began life as a mortgage originator and servicer, had grown to about $130 million of assets before being pummeled by the California real estate debacle of the early 1990s. With losses and bad assets mounting, it discontinued mortgage operations in 1994 and shifted to become a more traditional community bank, focusing on commercial lending and serving small businesses and individuals. The bank also changed management teams. Mr. Decker said the bank has now developed a strong following in its community through a new focus on customer service. Local residents pumped in $2 million of new capital late last year, and the bank has boosted deposits by 106% since it moved to its current location in February. However, Security First has continued to be hobbled by losses and a high level of bad loans, and it needed Belvedere's capital to support a recovery and growth. On the flip side, the investment is also ideal for Belvedere, since the bank's small size made it easier to start up the holding company and work with regulators, Mr. Decker said. "The opportunity was right," he said. "They needed capital, and we liked the geographical area and the management team and the fact that there aren't any other local community banks." The planned investment in Security First is the first by the fund since it was started by Mr. Decker and Anthony M. Frank, former chairman of First Nationwide Bank, San Francisco, and a former postmaster general. u