Sports Impresario Starts New Bank in Century City
A new bank in Century City has raised more capital than any start-up bank in Los Angeles County history, illustrating the attraction that well-connected community institutions continue to hold for wealthy business and professional people.
First Century Bank, created by Alan I. Rothenberg, a prominent L.A. lawyer and sports impresario who founded Major League Soccer, will officially open today. Rothenberg, 64, who started his career as a banking law specialist, set out to raise up to $22 million in late December and won permission from regulators to increase the amount by 20%, to $26.4 million, because of strong demand.
When the capital campaign closed about a month later, First Century had been offered more than $34 million from more than 400 investors, largely from the Los Angeles-area business community, and wound up returning more than $7 million.
A larger percentage “went back to people from out of the area,” said Rothenberg, the bank’s chairman. “I wanted to raise it from investors who will help us promote the bank.”
First Century is starting with one branch in Century City, but later would consider additional branches in areas such as the mid-Wilshire district and Newport Beach, Rothenberg said.
Its target customers are small- and medium-size businesses and professional organizations, mainly on the Westside of Los Angeles.
First Century is the latest in a recent series of such start-ups that have raised about twice the $10 million in capital that most ambitious new banks would shoot for, said Edward J. Carpenter, an Irvine banking consultant who worked with Rothenberg.
The record for the state was set last May by Commercial Bank of California in Costa Mesa, which raised $27.3 million, Carpenter said, citing Federal Deposit Insurance Corp. data. Commercial’s chairman is homebuilder William Lyon, who got it started in a private stock offering to several dozen associates.
Other high-capital new California banks include Bridge Bank in Santa Clara, which raised $19.2 million to open in May 2001, and Orange County Business Bank in Newport Beach, which raised $19.8 million and opened in December 2002.
First Century’s president and chief executive is Richard S. Cupp, 63, a former executive at First Interstate Bancorp and California Federal Bank, which are among many large Southern California banks that have been merged out of existence.
As the industry enters another big round of consolidation, with deals like Bank of America Corp.’s acquisition of FleetBoston Financial Corp. and J.P. Morgan Chase & Co.’s takeover of Bank One Corp. grabbing headlines, new banks continue to form.
In California, 24 banks were merged out of existence last year, but 14 new ones were started, according to Carpenter, whose investment bank, Carpenter & Co., maintains such an extensive database on the industry that the California Bankers Assn. uses in its annual report.
Shareholders in these community banks have enjoyed big returns as investors scarred by the savage bear market earlier this decade looked for conservative, easy-to-understand businesses to back.
The stocks of U.S. banks with assets of less than $500 million rose 44% last year, compared with 26.4% for the Standard & Poor’s 500, and 144% over the last three years, Carpenter said. In California, shares of such small banks appreciated by 59% in 2003 and were up 190% over the last three years.
Backers of these banks say they appeal to individuals who are willing to pay more for banking services in return for being able to talk directly to top banking executives, many of whom, like Rothenberg, have broad networks of friends and business associates built over decades.
Rothenberg, a retired Latham & Watkins partner, in 1965 helped found what initially was called Manatt, Phelps & Rothenberg as a banking-law firm. A former president of the State Bar of California, Rothenberg was the top legal aide to Jack Kent Cooke when Cooke owned the Forum, the Los Angeles Lakers and the Los Angeles Kings.
