Ex-Postal Official’s Fund Buys Control of O.C. Bank
A $75-million investment fund headed by former Postmaster General Anthony M. Frank has taken majority control of a tiny Orange County bank as its first step in preserving locally operated California community banks.
The fund bought a 52% stake in Security First Bank in Fullerton for $3.5 million and plans to make “significant” investments in other small banks in Los Angeles and Orange counties, said Thomas Byrom, one of the fund’s four principals.
“The ongoing larger bank consolidation is producing a gold mine for smaller banks,” Byrom said. “A lot of customers like dealing with smaller banks, and there are a lot of disaffected customers who have had accounts moved around amid the mergers.”
The banking industry has been in merger turmoil in recent years both at the big bank level and among smaller institutions, several of which are fattening up to make themselves attractive buys for major banks.
Frank and his partners say they want to make sure independent banks remain on the scene. They see opportunities at institutions others often overlook--the money losers that still have good prospects, as well as those with less than $500 million in loans and other assets.
They formed the California Community Financial Institutions Fund to invest in those undervalued banks. A veteran savings and loan executive, Frank headed First Nationwide Bank and later built Caliber Bank in Arizona before selling it.
In a departure from other investor groups, the new fund doesn’t want to take over any bank’s operations. Instead, it plans to acquire large stakes--10% to more than 50%--in banks it likes, then work with current executives and directors.
Though it has a majority stake in Security First, for instance, it is putting only one partner, Richard W. Decker Jr., on the eight-member bank board. Decker is a former chief administrative officer of First Interstate Bank, which was sold last year to Wells Fargo & Co.
Among those that gave the fund its first $75 million are the California Public Employees Retirement System, the GTE pension fund and the San Diego County retirement fund.
