With yet another small community bank (Cal National) being subsumed by a bigger bank (U.S. Bank), the prospects for a group of investors who have been working towards opening a bank in Pacific Palisades for the last two years may seem dismal. Yet, according to Brad McCoy, the president and CEO of the future Pacific Palisades Bank, things are actually looking up. While the goal has always remained clear, the road to achieving the branch is more circuitous, particularly following the industry meltdown that reached a crippling crescendo late last year. ’It has been tough to form a bank,’ McCoy admits, adding that his group of investors has given up the idea of starting a bank, in lieu of acquiring an existing institution. ’Regulators have made it difficult,’ he says. ‘We were essentially told by the FDIC, not in so many words, that they aren’t approving new ones and that the strategy we should pursue is to acquire a small, clean institution. Surprisingly, the list is longer than you can imagine of banks that are clean with small capitalization’that makes them good candidates to take over.’ McCoy, who was formerly the head of small banking at First Federal Bank of California, has been acting as a consultant along with CFO Dan Rood to the organizing group until the bank is actually formed. In the spring of 2007, the organizing committee of 23 individuals, including Palisades residents Jim Wadsworth, Bob Klein, Bill Mortensen, Bill Fritzsche, Brad Favre, Michael Wojciechowski and Sterling Lanier, filed their charter application with the FDIC and the Office of Thrift Supervision. The group, which has held together and continued with monthly board meetings, is now hopeful that they will reach an agreement with one of the banks they are studying by the end of the year. ’All our prospects are profitable,’ McCoy says. ‘The economic equation will be better because things are less expensive than they were two years ago.’ Again, following the advice from the FDIC, McCoy’s group is looking to buy something small, consistent with their strategy. ‘That way, if you make mistakes, you make small mistakes. Our business is community banking: people services, small business loans, core savings accounts, no investment management,’ he emphasizes. Pacific Palisades Bank is looking at existing banks with no more than five branches. They would keep the existing management in place, while headquartering in the Palisades. While not at liberty to offer any specific hints at what candidates might be in the running, McCoy does say the group is looking at a bank in San Diego. In encouraging the group to buy something small, regulators advised the investors to preserve the founders’ capital, so that when the time came to add a branch they’d be in a better position. While the FDIC can’t help the group enter the market, they can help with opening a branch in Pacific Palisades, the ultimate goal. There are now at least two potential building locations in town. One is the Wells Fargo branch, assuming they move into Wachovia’s space on Sunset (Wells acquired Wachovia a year ago). The second is Cal National at the corner of Swarthmore and Sunset or U.S. Bank on Sunset, depending on how U.S. Bank consolidates its acquisition. Earlier this year, McCoy’s group tried to negotiate a lease for the long-vacant Office Supplier store on Sunset, which is owned by Palisades Partners. ’After all the machinations with Palisades Partners, we now have other locations up for grabs, independent of Palisades Partners leasing us space, and we would avoid spending $1 million to renovate,’ McCoy says.
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