SAN DIEGO - In its first expansion into California, Capitol Bancorp of Lansing, Mich., has started two holding companies in the state.
The $1.4 billion-asset holding company, which is known for starting community banks in its home state as well as in Indiana, Arizona, Nevada, and New Mexico, aims to do the same through First California Southern Bancorp in San Diego and First California Northern Bancorp in San Francisco. It also wants to buy banks in the Golden State.
"Start-ups are our area of expertise," said Joseph D. Reid, Capitol's chairman and chief executive officer, "but with the change in pricing of various banks in the marketplace, there are also opportunities for acquisition."
Michael Moran, a partner in the Detroit investment bank Roney & Co. and a former bank analyst, is spearheading Capitol's efforts in California. Former executives of Wells Fargo and Bank of America are board members of the California affiliates; they include Joseph Stiglich, a former Wells vice chairman, who is on both the new companies' boards.
Mr. Reid said Capitol plans to open a bank in La Jolla by the third quarter. It is particularly keen on the San Diego market, which is growing rapidly and has lost several community banks to consolidation in the last year.
On the acquisition front, Capitol is eyeing stock deals for banks in the $25 million- to $250 million-asset range, Mr. Moran said.
Mr. Reid and Mr. Moran said investors and customers alike will take to Capitol because it has a history of letting its banks operate fairly autonomously. It generally takes a 51% stake in its subsidiaries and hires local board members and management people; it says it would use the same formula at any bank it buys.
Robert J. Gallivan, a principal at Bank Compensation Strategies Group in San Diego, said Capitol's timing for acquisitions is good, since many banks' stocks are "in the tank." But he said Capitol would have to clearly demonstrate its ability to retain local flavor or risk losing out to rival bidders - such as $1.1 billion-asset Belvedere Capital Corp. of San Francisco - for community bank holding companies.
Belvedere has "an understanding of California banking, they have lots of capital, and they're looking to buy with stock or cash very soon," Mr. Gallivan said.
Additional competition for Capitol in Northern California may come from Greater Bay Bancorp of Palo Alto and Westamerica Bancorp. of San Rafael, Mr. Gallivan added.