Mark Simmons wasted no time getting back into banking in Southern California.
As soon as his nonsolicitation agreement expired, Simmons immediately announced plans to open Core Commercial Bank in Newport Beach, Calif. He had been under a two-year restriction from area banking since selling Commerce National Bank to Sterling Financial in Tacoma, Wash., in October 2013.
Simmons secured permission this month from California regulators to raise money and organize the first de novo bank approved in the Golden State since August 2008. And he plans on doing the exact thing he did at Commerce — and at Marine National Bank before that — by making commercial-and-industrial loans.
Some may question Simmons' sanity to open a bank in Orange County, which is jam-packed with community banks that emphasize commercial lending, including Opus Bank, which has a $1.1 billion C&I loan book, and Pacific Enterprise Bank, where such credits make up a whopping 44% of total loans.
The market also has Wells Fargo, Bank of America, JPMorgan Chase and MUFG Union Bank, which hold a combined 56% of the county's retail deposits, based on data from the Federal Deposit Insurance Corp.
Regardless, Simmons is staying in his comfort zone. His new bank's offices will be directly across the street from the previous home of Commerce National, at the intersection of MacArthur Boulevard and Von Karman Avenue. Commerce National is now part of the $23 billion-asset Umpqua Holdings.
Core Commercial's other executives will include Darrell Daniel as chief banking officer and Jonathan Sigel as chief credit officer. Carpenter & Co., in Irvine, has been advising Simmons on the de novo effort; Richard Knecht is the bank's legal counsel.
In a wide-ranging interview with American Banker, Simmons discussed his business plan, how he plans to deal with intense competition for business loans and how to deal with regulators. Here is an edited transcript.
Can you talk about your business plan?
Mark Simmons: We're going to focus on doing two things: gathering deposits from, and making loans to, local businesses and the professional community. We will never get involved in swaps or hedges. We will never make a residential mortgage loan. And we'll never make a loan to a foreign country. We're the typical, traditional, old-fashioned business community bank.
We will have 15 employees on day one. The goal is to get to an operating profit as soon as we can.
What about commercial real estate lending?
Virtually every community business bank in Southern California has an awful lot of real estate. I can't give you an exact amount of CRE that we will have. The focus is, for sure, on traditional C&I business loans. But we will clearly make CRE loans. We will make loans on the buildings that our industrial customers live out of, or the professional office buildings that CPAs and lawyers live in. We're talking about loans of $1 million or $2 million each. For CRE, that's not a big deal.
Are you planning to make Small Business Administration loans?
SBA is way in the future. That's a good business, but you really better have the people and the systems in place before you do it. But I like that business.
Why did you decide to open in Orange County, where there are a lot of commercial lenders?
That's where the money is. There are $86 billion in deposits in Orange County. Central and southern Orange County is just a fabulous place to do business. The individual wealth in Newport Beach is staggering. The number of businesses in Irvine is huge.
How has the California Department of Business Oversight handled your de novo application, since they haven't approved one since 2008?
Everyone likes to beat up on the regulators. They've got a job to do. They asked all the right questions. I'm sure they have a big, long checklist. The nice part about this is that a brand-new bank is … somewhat novel today. They probably had to dust off a few procedures.
We have years and years of experience and we've all dealt with compliance for years. You don't whine and cry and complain about it; it's just a fact of life. You can complain if you want, but nobody wants to hear it. You play by the rules.