SAN FRANCISCO - With its $80 million purchase of Sacramento (Calif.) Commercial Bank two weeks ago, Belvedere Capital Corp. has depleted its $160 million community bank acquisition fund.
But instead of taking a breather after more than two years of steady dealmaking, the investment company has laid out an ambitious plan for 2000 that includes the creation of a much larger bank investment fund and a public offering for its new community bank holding company. Belvedere Capital president and co-founder Richard W. Decker said in a recent interview here that he is rounding up investors for a $400 million to $500 million fund that would buy stakes in banks with as much as $2 billion of assets. That, he said, should make California Community Bancshares, its bank holding company, more attractive to investors when it goes public in the third quarter.
"The analysts and the Street look at you differently as your size increases," said Mr. Decker, a former executive at First Interstate Bank and the onetime chief executive officer of Westamerica Bancorp in San Raphael, Calif.
Belvedere was founded in 1997 by Mr. Decker and Anthony M. Frank, a longtime California banker and former U.S. postmaster general.
Backed by such blue-chip investors as Bell Atlantic Corp. and the California Public Employees Retirement System, Belvedere Capital has bought four banks outright and acquired majority stakes in three others since late 1997.
Six of the seven banks have since been merged into four institutions, two in Northern California and two in the southern part of the state. The four banks operate under California Community Bancshares, which now has $1 billion of assets.
Though the original fund targeted only California banks, the new one would seek to buy as many as 10 banks anywhere in the western United States. "We think there are some opportunities in Oregon and Washington," said Mr. Decker.
Belvedere will also be on the lookout for technology and electronic commerce investments, Mr. Decker said. It will invest about 10% of its available funds in technology firms - such as back-office processors - whose businesses are related to financial services, he said.
Robert J. Gallivan, a principal at Bank Compensation Strategies Group in San Diego and a longtime observer of California's banking scene, predicted that Mr. Decker's group would have little trouble finding banks to buy. In his view, Belvedere Capital will have the edge over other buyers because it can offer stock - the preferred currency of most buyers - and cash. Mr. Gallivan also said he expects that California Community Bancshares' stock will come out of the gates strong this summer.
Though bank stocks have languished for months, Mr. Gallivan offered two reasons why they are likely to rebound this year. First, he said, he expects that the recent pattern of interest rate hikes will level off, and second, he predicted that a blockbuster deal will rekindle interest in bank stocks.
"Their timing will be perfect," he said of Belvedere's IPO.