Bank of Commerce, San Diego, is wrapping up a $5.38 million preferred stock offering that officials at the expansionist bank hope will boost SBA lending.

The $258 million-asset bank has grown more than 85% in the last year, largely because of its decision in 1993 to hold on to the loans originated by its three-state SBA lending arm instead of selling the loans in the secondary market.

David Bartram, executive vice president, said the new capital will help support the growth of the SBA portfolio, but could also serve the bank's growing ambitions in San Diego County.

Bank of Commerce's SBA lending, most of it done through loan offices outside Southern California, has made it one of the only community banks in its region to log appreciable growth in the last year.

"There's not really a major bank left in San Diego," he said, referring to the failures and mergers of recent years that have left the California city fairly dry of local banks. "We'd certainly like to fill that role."

Bank of Commerce's competitors could give it some competition in that department, however, despite the stubbornly anemic economy in the region. Several San Diego bankers said the talk of mergers is rampant among the eight community banks based in the county. The remaining independents are vying for the size and efficiency that will allow them to compete with First Interstate and the other major banks that have moved into the area in recent years.

Escondido-based FP Bancorp earlier this summer laid out plans to buy two area banks and wrap them into its First Pacific National Bank, creating a $372 million-asset institution, the area's second-largest independent bank.

But one of the banks in the deal, Rancho Santa Fe National Bank, pulled out of the deal last week, according to its CEO, James Boyce.

"Our board decided it wasn't in the best interests of our shareholders or customers," Mr. Boyce said. "Community banks are hard to put together even under the best of circumstances."

He did say, however, that Rancho Santa Fe would consider other mergers.

"The economy here is less than spectacular, and we're not looking for significant growth in any of our business lines," Mr. Boyce said. "Mergers are a clear way to gain momentum and efficiency."

Mr. Bartram of Bank of Commerce agreed.

"We'll look at any opportunity we come across," he said.

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