After the financial crisis led to a long nationwide drought in the creation of new banks, the second de novo bank application in less than a year has been submitted in California.
A group led by the Gallaher family of Windsor, Calif., has filed for approval of Blue Gate Bank, to be based in Costa Mesa, Calif. The group has raised $30 million of equity and hopes to receive regulatory approval in the second quarter, said Gary Findley, an Anaheim, Calif., attorney who is advising the group.
The Gallaher family is also the principal shareholder group of the $957 million-asset First Community Bank in Santa Rosa, Calif. The family also owns Oakmont Senior Living, which has a facility in Orange County, and they are familiar with the area, Findley said.
"They like what they did in Santa Rosa with First Community and they like the market in Orange County," Findley said. "They want to operate a long-term entity here and they feel they've got the management team to do it."
They have recruited Chris Walsh, former chief executive of the $938 million-asset Sunwest Bank in Irvine, Calif., to be Blue Gate's CEO. The group has also hired former executives from the $3.6 billion-asset Community Bank in Pasadena, Calif.
Blue Gate will focus on commercial and industrial lending, commercial real estate and small-business lending, Findley said. It will start with its headquarters office and retail branch in Costa Mesa, and also a loan production office in Roseville, Calif., which will be staffed with Small Business Administration loan officers.
California has not approved a de novo bank application since 2008, when regulators approved the $491 million-asset Valley Republic Bank in Bakersfield. Orange County is now the location of two proposed de novos. A group led by Mark Simmons, the former CEO of Commerce National Bank, in November obtained regulatory approval to raise money for the proposed Core Commercial Bank in Newport Beach. Orange County is a good place to start a bank because of the economic climate and because industry consolidation reduced the number of hometown banks there, Findley said.
"Twenty-plus years ago, we had almost 40 banks in Orange County," he said. "Now there are less than 10 banks" headquartered in Orange County.
The largest Orange County-based bank is Banc of California in Irvine, with $8.2 billion in assets, according to the Federal Deposit Insurance Corp. Other big Orange County-headquartered banks include the $3 billion-asset First American Trust in Santa Ana and the $6.6 billion-asset Opus Bank in Irvine.
The organizers held several preliminary meetings with regulators at the California Department of Business Oversight's Division of Financial Institutions and the FDIC, and that should help with the approval process, Findley said.
Regulators "just have to feel comfortable with our business plan," he said. If approval is obtained, "they can open relatively quickly because the money is already there."