TIB-The Independent Bankers Bank in Irving, Tex., has been offering its correspondent services to banks in California for five years but has missed out on one lucrative piece of business there: holding funds in escrow for banks in organization.
That’s because under California law, start-up banks that choose a state charter must keep escrow funds in another state-chartered bank. All TIB has in the state is a loan production office.
That is about to change.
Eager to capture a share of escrow business in what is the nation’s most active state for start-ups, the $1.6 billion-asset TIB is acquiring a charter there that it plans to use to convert the loan production office, in Huntington Beach, into a full-service correspondent branch.
It is easy to see why TIB wants the California charter. Since 2004, 65 banks have opened in California, the most in any one state, and the vast majority of start-ups there choose the state charter. Moreover, start-up banks are raising money like never before, opening their doors with record amounts of capital.
Organizers of state-chartered start-ups in California can park funds they have raised in the $485 million-asset Pacific Coast Bankers’ Bank in San Francisco or in other state-chartered community banks that could eventually be competitors.
Michael G. O’Rourke, TIB’s president and chief executive officer, said California start-ups want another option.
“There continues to be a significant number of de novo banks forming in California, increasing the need for correspondent providers who will serve as their partner from start to finish, while not competing with them for customers,” Mr. O’Rourke said in a news release late last month.
TIB is acquiring the charter from the $1 billion-asset First California Financial Inc. in Los Angeles. First California was created in early March through a merger of equals between National Mercantile Bancorp in Los Angeles and FCB Bancorp in Camarillo, and the new entity was left with a superfluous charter.
TIB did not say what it is paying for the charter. The deal is expected to close in about 60 days.
