After helping Placer Sierra Bancshares in Sacramento nearly quadruple its assets by financing a string of deals, a San Francisco private equity fund is looking to repeat that performance.
Belvedere Capital Partners Inc. is set to close its second fund, Belvedere Capital Fund II, on March 31. The firm's co-founder and chairman, Richard Decker, said it should be "similar in size" to Belvedere Capital Fund I, which was created in 1997 and held approximately $160 million.
Belvedere Capital Partners will create a holding company to acquire and open banks in growing markets throughout the country.
First on the agenda is a proposed start-up in San Francisco. In December, Belvedere - along with Warren Hellman, the chairman of another San Francisco private equity firm, Hellman & Friedman LLC; and the former Charles Schwab chief executive David Pottruck - filed an application with the California Department of Financial Institutions to open Presidio Bank.
Mr. Decker, a veteran of First Interstate Bank in Los Angeles and Westamerica Bancorp in San Rafael, said he could not give many details about the new bank, since the application is still pending. However, he did say that the time is ripe for a San Francisco start-up.
"There hasn't been a new bank to open in San Francisco in close to 25 years," he said. "There's certainly room for a disciplined C&I lending bank that focuses on just giving incredible personalized service to small companies underneath the radar of the elephants."
Big banking companies, including Wells Fargo & Co., dominate the San Francisco deposit market. As of June 30, money-center banks controlled more than two-thirds of the market, according to the Federal Deposit Insurance Corp.
James R. Woolwine will be the new bank's chairman, and Steve Fleming will be its CEO.
Mr. Woolwine was the president and CEO of Golden Gate Bank, which Greater Bay Bancorp in Palo Alto bought in 1999. Mr. Fleming was the president and CEO of National Bank of the Redwoods, which Westamerica bought last year.
Dave Alford, a bank consultant in Sacramento, said, "This is classic Belvedere - they're bringing in a really solid management team with great business banking backgrounds and a good track record for being successful in that area."
Belvedere did much the same thing with Placer Sierra. Ronald W. Bachli, a Belvedere executive, was dispatched to lead Placer when it was formed in 1999; today he is its chairman and CEO. Under his leadership, the $1.86 billion-asset Placer increased assets through internal growth and acquisitions, including a $175 million deal announced this month for the $657 million-asset Southwest Community Bancorp of Carlsbad, Calif.
James Abbott, an analyst at Friedman, Billings, Ramsey & Co. Inc. in Arlington, Va., said Placer's management team has created "a really top-notch franchise" with a particularly strong core deposit base. In the fourth quarter 31.9% of its deposits were no-interest, and its cost of deposits was 1.04% - a figure that put it in the top 3% of banks with $1 billion to $10 billion of assets, he said.
"Things have worked out pretty well for Belvedere with their Placer Sierra initiative," Mr. Abbott said. He expects similar results at Presidio. "The prospects for a de novo doing commercial business lending in San Francisco are pretty favorable right now."
A growing number of private equity funds are scouting for community bank deals.
In July, Hovde Financial Inc. of Washington launched a $70 million private equity fund to buy community banks and thrifts around the country. And Castle Creek Capital LLC in Rancho Santa Fe, Calif., has bought banks or stakes in banks, in California, Colorado, Illinois, and North Carolina.
Belvedere's first fund was backed by such blue-chip investors as Bell Atlantic Corp. and the California Public Employees Retirement System. As the general partner of the California Community Financial Institutions Fund Limited Partnership, Belvedere bought four banks outright and acquired majority stakes in three others. It eventually consolidated the banks under a holding company, California Community Bancshares, which was later renamed Placer Sierra Bancshares.
When Placer went public in 2004, Belvedere sold a 38% stake. In January it said it planned to reduce its ownership below 15%.
Belvedere's first fund focused primarily on buying a number of small California banks and thrifts. Belvedere Capital Fund II aims to be more diverse, investing in insurance brokerage firms, payment systems companies, and other financial service companies - not only in California, but also in Texas, Florida, and the Pacific Northwest.
