California is about to get its first "bankers' bank," inspired by merger activity among superregionals.
Pacific Coast Bankers' Bank, its preliminary charter application approved by the Federal Deposit Insurance Corp. and the state, is raising capital from bank investors. Chief executive R. Albert Roensch said he'd like to open the institution by October.
"It's the right toy for the time," he said. "So many big banks have disappeared, it's made community banks think about where they're going to get services in the future."
Acquisition activity in the West, especially California, has left many small banks scrambling for a correspondent relationship. With major players such as First Interstate Bancorp, Los Angeles; West One Bancorp, Boise, Idaho; and Security Pacific Corp., Los Angeles, having been swallowed up, Mr. Roensch said, he thinks community banks might be better served by dealing with a more stable entity.
"A bankers' bank is a reasonable alternative solution to the typical correspondent banking services bigger banks have provided in the past," he said. "I'm not out to pick a fight with the big boys, but I think there's more than enough business to go around for everybody."
Not counting the California institution, there are 16 bankers' banks in the nation but none west of Denver. Mr. Roensch said Pacific Coast Bankers' Bank will sell stock only to California banks but will be able to serve institutions throughout the West.
Geared toward community banks with assets of $500 million or less, the San Francisco-based bank has a minimum capitalization target of $3 million and a maximum of $4.5 million.
Mr. Roensch said the bankers' bank has gotten commitments for 30% of its minimum capitalization. Once enough money has been raised, the bank will seek final state and federal approvals.
A Colorado community banker who does business with Bankers' Bank of the West in Denver said bankers' banks are geared toward the small institutions.
"Their only business is doing business with us and our peers," said Richard W. Ducic, chief executive of Western Community Bank, Cedaredge. "As such, they're so much more attuned to our needs."