A quest to tap local markets
has made Grandpoint Capital one of the most culturally diverse
banking companies in the US. Grandpoint’s acquisitions of
minority-focused banks have caught the attention of analysts
because minority-focused banks historically are sold to similar
competitors. Charles Davis reports.
Go deeper with GlobalData
The Great Recession forced a long
period of inactivity on the selling block, but the US bank mergers
and acquisitions game has kicked in with a vengeance in recent
months.
One of the most interesting
institutions to emerge from this flurry of M&A activity is
Grandpoint Capital, a Los Angeles-based bank holding company with a
focus on acquiring small but impressive local brands, and with an
emphasis on culturally diverse banking markets.
Flush with cash after a nearly
two-year fundraising effort netted some $335m in capital,
Grandpoint has acquired three separate banks since mid-June – Santa
Ana Business Bank, First Vietnamese American Bank and Southern
Arizona Community Bank – and has opened another branch in its home
market in the past months.
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By GlobalDataGrowth
opportunities
CEO Don Griffith has indicated that
Grandpoint will not hesitate to use its capital if more growth
opportunities arise, and all indications are that opportunities
will present themselves with some regularity, as the improving
economy and an ever more aggressive FDIC combine to bring more
banks onto the market.
In December, Grandpoint added
Southern Arizona Community Bank, to its coffers. It may seem tiny –
Arizona Community Bank had a single office and total assets of
approximately $91m – but in conjunction with the Southern Arizona
Community Bank purchase, Grandpoint Capital expects to complete the
acquisition of the main office operations of Bank of Tucson, also
from Capitol Bancorp Limited, in early 2011.
The branches will operate under the
Bank of Tucson name and will remain separate from the new
Grandpoint Bank in Los Angeles.
Griffith, who served on the board
of directors of the former Tucson-based Arizona Bank for roughly 10
years in the 1990s, is well acquainted with the Arizona market and
the opportunities it presents Arizona Bank was the largest
independent bank in the state before its sale to Compass Bank
1998.
“Grandpoint Capital’s strategy is
to build strong banks around strong management in markets where we
can make a difference,” Griffith said.
“We are excited about building a
strong presence in the southern Arizona market, which we believe
has significant business potential.This acquisition is an
opportunity to build on a well established banking platform in a
market we believe has tremendous long-term value.
“We will do that by combining our
capital with the outstanding talent and experience of the local
management team, led by Bank of Tucson President and CEO Mike
Hannley, who will serve in the same capacity for the new, combined
operation.”
Griffith, the former chairman and
CEO of First Coastal Bank, also previously served as chief
financial officer of First Interstate Bancorp, and as founder and
chairman of Peninsula National Bank.
In 1989, he founded DM Griffith
& Co, an investment firm that assisted Kohlberg Kravis Roberts
in its investment in Fleet Financial Group in 1991, as well as its
eventual purchase of the Bank of New England.
Following the close of the
transaction, Southern Arizona Community Bank and Bank of Tucson
operations will be consolidated and the bank will conduct business
under the Bank of Tucson name.
In November, Grandpoint bought the
failed First Vietnamese American Bank in Westminster, California,
from the Federal Deposit Insurance Corp., which was appointed
receiver when the California Department of Financial Institutions
closed the bank that served an area dubbed ‘Little Saigon’. That
deal came on the heels of Grandpoint’s first purchase, Santa Ana
Business Bank, a Hispanic-oriented institution, in June.
And in July, Grandpoint announced a
definitive agreement to acquire Encino-based First Commerce Bank.
First Commerce branches in Encino and Brentwood will become part of
Grandpoint when the transaction closes, expected by the end of the
year.
First Vietnamese operated a single
branch in Westminster, where it opened in 2005 as the first bank to
specifically target Vietnamese-Americans and their businesses in
Little Saigon, an area that is home to an estimated 200,000
Vietnamese.
First Vietnamese had not posted a
profit since it opened and was under regulatory scrutiny for much
of its existence. In October, the FDIC made public a prior order on
First Vietnamese to shore up its finances or find a buyout
partner.
Grandpoint Capital is among a very
small group of Pacific Coast institutions that have been willing
and able to roll up banks in their market, much less win a failed
bank, but that number may be growing as institutions cautiously
emerge from the recessionary environment.
Another California group, with a
different strategy, broke through when about 25 institutional
investors led by Stephen H Gordon recapitalised and took over Bay
Cities National Bank in Irvine with $460m in capital on 30
September.
The bank was renamed Opus Bank, and
Gordon became the chairman, chief executive and president. Analysts
say the deals for distressed banks are a good sign in a state that
has a lot of clean-up to do in the banking sector.
M&A
activity
Merger and acquisition activity seems
to be creeping up the banking food chain as well. Another recent
California deal, the merger between Nara Bancorp and Center
Financial Corp in Los Angeles, marked only the second deal of 2010
between community banks that each exceeded $1bn of assets.
Higher capital and regulatory costs
will make it increasingly difficult for larger community banks to
resist the economies of scale and potential earnings growth a union
could create.
The deal between the $3bn-asset
Nara and $2.3bn-asset Center would create the largest
Korean-American bank in the United States.
The other $1bn-plus deal involved a pair of Boston-area
institutions, the $6.8bn-asset Eastern Bank Corp’s purchase of
Wainwright Bank and Trust, with $1bn of assets, which closed in
November.
