After more than doubling its investment in a northern California banking company, a San Francisco private-equity firm is now hoping to repeat the performance in southern California.
Belvedere Capital Partners LLC last week announced a deal to buy an Orange County bank outright and a controlling interest in another. The two are to be combined with a third bank in Pasadena that Belvedere made a deal for in February.
The San Francisco firm plans to put all three, with about $650 million of assets, in a new holding company, Belvedere SoCal Inc., and expand it to at least $2 billion of assets, and possibly as much as $5 billion, within five years, according to Belvedere managing partner Alison Davis.
"We really like the southern California market, where there's a lot of [business] growth," she said in an interview last week. "We'd like to get a three-times return for our investors in five to seven years."
Though it will consider further acquisitions, Ms. Davis said, Belvedere SoCal can meet its growth target organically with a focus on lending to small and midsize businesses.
"We're looking to build offices where we can find world-class bankers, targeting high-growth markets such as Orange County and Temecula in the Inland Empire" east of Los Angeles, she said.
Belvedere's moves in southern California echo what it did in the Sacramento market with Placer Sierra Bancshares.
Belvedere founded California Community Bancshares in 1999, then folded seven banks into the multibank holding company that would become Placer Sierra. It more than doubled its $139 million investment when it sold about half of its stake in Placer's 2004 initial public offering and then most of the balance in a 2005 secondary offering.
The firm completely cashed out of the company last year. Placer then sold itself to Wells Fargo & Co. in a $645 million deal that closed in June.
Last week's deals included a $37 million cash agreement to buy the $165 million-asset Spectrum Bank in Irvine.
The private-equity firm also struck a deal valued at $47 million for the $217 million-asset First Heritage Bank in Newport Beach in which all the bank's shares would be exchanged for shares in Belvedere SoCal. The firm's February deal was $51 million in cash and stock for a majority interest in the $184 million-asset Professional Business Bank in Pasadena. All three deals are expected to close by yearend.
The new bank is to be led by executive chairman Alan Lane, a senior adviser to Belvedere and a former president and chief executive of the $699 million-asset Business Bank of California in San Bernardino.
Jim Claffee, the CEO of First Heritage, is to be the chief executive officer of Belvedere SoCal, leading a team of bankers currently at First Heritage.
First Heritage's current owner, the $4.5 billion-asset First National Bank Holding Co. in Scottsdale, Ariz., would as a result of the deal become a major investor in Belvedere SoCal.
Gary Dorris, the CEO at First National, said in an interview Monday that his company's California start-up, opened in 2005, needed capital if it were to grow. "This is the best way for us to retain our contact with this team and improve our involvement in California so that we could stay there long-term," he said.
Belvedere's Ms. Davis said the partnership with First National also lets Belvedere SoCal offer customers wealth and treasury management services through the Arizona company's flagship bank, the $2 billion-asset First National Bank of Arizona in Scottsdale.
First National had hired Scott A. Kisting to identify options for First Heritage, and the 35-year banking veteran led it to Belvedere.
In an interview Monday, Mr. Kisting, whose career has included stints at Bank of America Corp. and the former California Federal Bank, before it and its parent, Golden State Bancorp, were bought in 2002 by Citigroup Inc., said he recommended Belvedere, in part, because it attracts high-caliber investors such as the California Public Employees Retirement System, Northwestern Mutual Life Insurance Co., and Royal Bank of Canada.
"Additionally, Belvedere's executives all have experience in banking, so the firm not only adds value" to its portfolio companies "through capital but also with their knowledge," he said.
Belvedere was founded in 1997 by Richard W. Decker Jr. and Anthony M. Frank. Mr. Decker was a former executive at First Interstate Bank and the onetime CEO of Westamerica Bancorp in San Raphael, Calif. Mr. Frank was the CEO at the former First Nationwide Bank in San Francisco and a former U.S. postmaster general.
The firm invests in community banks and other companies that cater to banks. Belvedere owns a 40% interest in the $216 million-asset Green Bancorp in Houston and a controlling interest in two start-ups: the $74 million-asset Presidio Bank in San Francisco and the $70 million-asset Seaside National Bank and Trust in Orlando.
Belvedere also has a minority interest in the $46 million-asset Americas United Bank, a start-up in Glendale, Calif., which focuses on Hispanic businesses. Other investments include Hometown Commercial Capital, a commercial real estate finance company in Burlingame, Calif.; and BenefitStreet, an employee benefits software firm in San Ramon, Calif.
