Financial services veteran plans to buy Bay Cities National Bank of Redondo Beach

A Southern California financial services veteran is launching a fresh bank-buying spree, adding to a wave of private money flooding into California community banks despite the state’s high unemployment and depressed real estate.

Stephen H. Gordon, who founded Irvine-based Commercial Capital Bancorp in 1998 and sold it to Washington Mutual Inc. for nearly $1 billion in cash in 2006, heads an investment group that agreed this week to pump $460 million into Bay Cities National Bank, a five-branch Redondo Beach institution in need of capital.

The infusion is part of a deal that would give Gordon’s group full ownership of Bay Cities, to be renamed Opus Bank. The agreement requires regulatory approval.

After installing a new board of directors and a team of 30 managers, Gordon plans to use Opus as a platform to acquire financial institutions in California, Oregon, Washington, Nevada and Arizona. The $460 million in fresh capital could support a banking operation with about $5 billion in assets, much more than the $273 million in assets on Bay Cities’ books.

With its fresh start and deep pockets, the bank will be able to lend more freely, Gordon said in an interview.

“We felt there was a need for a bank that wasn’t dragged down by legacy problems,” he said, referring to troubled loans and a need to raise capital.

In a statement issued by Bay Cities, Gordon said Opus would help “fuel the economic recovery just beginning” in the western U.S.

Such problems run deeper at banks in California and the West than in the nation as a whole, according to a recent study by the Federal Reserve Bank of San Francisco, which found that most California banks were still making little or no profit in the second quarter of this year.

California’s largest troubled banks — names like IndyMac, Downey Savings, California National and United Commercial — have long since failed and been acquired, mostly by larger banks. So investors are buying small banks, relatively healthy ones as well as institutions that are in distress or have already failed, Anaheim-based banking consultant Gary Findley said.

Private investment groups scouting for acquisitions include Carpenter Community BancFund of Irvine, headed by investment banker and consultant Edward J. Carpenter. The fund, which Carpenter said raised “significantly more than $200 million,” has said it intends to invest in 12 or 15 community banks, half in California and half in other states.

Carpenter’s fund so far has acquired controlling stakes in Irvine’s Plaza Bank, Bank of Manhattan in El Segundo, Bridge Bank in San Jose, California General Bank in Pasadena, Mission Community Bank in San Luis Obispo and SouthWest USA Bank in Las Vegas.

Another major player is Grandpoint Capital Inc. of Los Angeles, headed by longtime banker and investor Don M. Griffith, which has raised $335 million to buy community banks and in recent months has acquired Santa Ana Business Bank, First Commerce Bank of Encino and two Arizona banks.

Despite the competition, Gordon said he wasn’t worried about finding banks to buy and business to conduct because of the voids created by failed banks and the fact that many institutions are still focused on their own needs to raise capital.

“There’s enough to go around,” he said.

Gordon, 48, who lives in Laguna Beach, worked at New York investment bank Sandler O’Neill & Partners before moving to California in 1995. He ran Genesis Financial Partners, a hedge fund that invested in underperforming financial institutions, before starting Commercial Capital.

Despite his success with Commercial Capital, Gordon’s track record isn’t flawless. In late 2007, he was hired to revive Fremont General Corp. of Santa Monica, parent of the aggressive subprime mortgage lender Fremont Investment & Loan.

At the time Gordon said he anticipated “a successful turnaround of the company.” But he was unable to keep Fremont from filing for Chapter 11 bankruptcy protection seven months later after regulators forced it to shut down most of its operations.

scott.reckard@latimes.com