Valle de Oro Bank pulled off something Southern California hasn't seen in years: the successful sale of common stock by a healthy community bank.

The $123 million-asset Valle de Oro, which has four branches in suburban San Diego, raised $4.3 million by selling common stock at $12.50 a share -- book value -- through directors, officers and group of local broker-dealers.

Almost all capital-raising initiatives since 1990 among community banks in Southern California has been for distress situations where new capital was mandated by regulatory agencies. More often than not, undercapitalized community banks were selling what amounted to apologies or promises, not performance, when they sold stock.

"This was an easy sell, even in a difficult market," said Howard Levenson, whose San Diego firm, Western Financial Corp., managed Valle de Oro's offering.

"They are a survivor," he added. "In their market, two independent banks have been shut down, a major savings and loan was closed and [San Diego Trust & Savings Bank] was sold to First Interstate.

"This bank has been in a position to capitalize on the dissatisfied customers from all these institutions .... In our area, the competition among independent banks has diminished greatly."

Independent banks in San Diego have been some of the hardest-hit in all of California. Plummeting real estate prices sank several small banks and thrifts in 1993, a year in which 28 community banks failed in California.

Moreover, many of the surviving small banks are still hobbling, and have had to raise capital from private investors to stay alive.

Just last week, for example, Ranco Santa Fe National Bank in a wealthy San Diego suburb said it was getting an infusion of money from a Chicago investment group to bring it more capital for expansion.

Valle de Oro Bank is 11 years old and has had 10 years of increasing earnings. With the stock sale, the bank has a 13% risk-based capital ratio.

"The key here is the big loss of San Diego Trust & Savings Bank." said William V. Ehlen, chief executive of Valle de Oro. "There are so many disenfranchised customers looking to switch from First Interstate to a local institution."

Mr. Ehlen said the bank will use the capital to beef up a planned fifth branch and a new headquarters expected to open in December. Beyond that, the bank is looking for strong internal growth.

"We plan to double in size in the next five years," he said. "We've made a strategic decision to remain small, but you have to have at least $200 million in assets to remain small anti still make a good return. We are looking at opening new branches and arc studying closely the demographics of other suburban areas of the county."

Mr. Levenson said there are dozens of branch shells around San Diego from the upheaval, providing ripe opportunities for expansion or even de novo banks.

California has only seen one de novo bank in four years, and that was in San Jose. Mr. Levenson said he thinks a de novo could fly in San Diego.

"We've heard rumors about several organizing groups," he said. "Getting the people and money is only part of the problem, though. The process of getting a new charter in California can take up to a year and a half. The need is there, though. There are still a number of areas in San Diego County that are underbanked or even not banked at all." Valle de Oro Bank At a Glance Headquarters: Spring Valley, Calif.Founded: 1983Assets: $123 millionCEO: William V. EhlenBranches: FourROA: 0.69%ROE: 10.05% Figures through June 30

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