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Wednesday, Oct 4, 2023

Financial Veterans Form New Bank In Santa Clarita

Former executives of Valencia Bank & Trust are about to open an independent, community bank in Santa Clarita. James D. Hicken, Frank Di Tomaso and Jeffrey Pollard say that the acquisition of Valencia Bank left a void in the local marketplace that the community has been anxious to see filled. So much so that the threesome raised more than the $12.5 million they originally needed in just a little over four weeks. “One of the things about the Santa Clarita Valley is that it’s a very tight knit community,” said Hicken, who is president and CEO of the new bank, Bank of Santa Clarita. “Larger banks tend to be more volume driven delivery systems. By the nature of what they are, they can’t compete with smaller banks.” The bank, which is expected to open on Oct. 25 after clearing some construction details, will focus on entrepreneurs, high net-worth individuals and small and mid-sized businesses. In addition to the traditional array of banking and consumer lending services found at most banks, Bank of Santa Clarita will also offer cash management services, and lending services geared to entrepreneurial startups. The bank is the first and only community bank to open in the area since Valencia Bank was acquired by San Francisco-based UnionBanCal, parent of Union Bank of California early last year, although several mid-sized banks have moved to set up branches in the area. Hicken, a former lending officer at Valencia Bank, had earlier worked with Union Bank, and moved back there as senior vice president of commercial lending following the acquisition. Di Tomaso, who holds the position of vice chairman at Bank of Santa Clarita, had worked with Hicken during the latter’s first stint at Union Bank and was working as new business development manager at City National Bank when the two former co-workers met one night last year for breakfast. “There were some things that happened that really caused me to question whether I wanted to be at a big bank,” said Hicken. “Frank said why don’t you start your own bank, and we laughed about it.” Di Tomaso’s father had started a bank and he had always wanted to try his hand at it. “A few days later, the phone rings, and it’s Jim,” Di Tomaso recalled. “And he said, were you serious, and I said I’d drop everything I’m doing in pursuit of that vision.” Preparing a plan The two men met for dinner shortly afterward with Pollard, another former colleague who had been working as a financial consultant, and the three began to map out a concept for their new bank. (Pollard is now COO and CFO at Bank of Santa Clarita.) Before long, the threesome began to put together a board of directors and hire attorneys and investment bankers to assist in the effort. With seed money from about 36 individuals the three men knew, Hicken and Di Tomaso resigned from their respective positions and, with Pollard, began to work full time on starting up the new bank. Their initial offering circular sought to raise between $10 million and $12.5 million. But within weeks the group had raised more than $15 million, mostly from individual investors who contributed on average between $5,000 and $10,000 each. In accordance with regulations, the partners actually had to return some of the funds to the investor group. “The majority of the individuals who subscribed were living in the Santa Clarita Valley,” said Hicken. “Our customers are the same people we see at the soccer field or at the restaurant on Friday night.” The outpouring of support for a community bank stems from the inability of larger banks to provide quick personal service, the partners said. “When you’re in a community bank environment, if someone has a problem, they can pick up the phone and talk to the CEO,” Hicken said. The focus on hands-on, personal service also means there are some services the Bank of Santa Clarita will not offer. “We won’t be doing home mortgages. That’s really a commodity niche,” Hicken said. But the partners say there are other services that a bank like theirs can deliver much more efficiently. For example, they say, the bank can offer a full range of Internet banking services, including bill pay and cash management services without investing the money larger banks invest in their own technology systems. Instead, Bank of Santa Clarita has contracted with Digital Insight Corp., a provider of Internet banking services, for their Internet banking services. “If you’re Union Bank and you want to put together a cash management program, you’ve got to spend tens of millions of dollars to do it,” said Hicken. “Digital will spend the same amount of money that a bank does, but they turn around and sell the services to other banks.” Although the partners explored the idea of becoming an SBA lender, they ultimately decided to provide different lending services. “We can originate SBA loans, but we’re not a preferred lender,” said Di Tomaso. “We did not see enough need in the Santa Clarita Valley to where it would pay for itself.” Instead, the bank will offer loans through Pacific Coast Regional Corp. a not-for-profit agency that provides state-guaranteed loans to startup businesses. Unlike SBA lenders, which look primarily at quantitative data and a borrower’s collateral, PCR relies on individual analysis of a business for its lending decisions, something larger banks won’t do because the process does not allow them to write loans in the volumes their businesses require. But the more personalized approach fits well with Bank of Santa Clarita’s overall strategy. The bank will open with 13 employees at a location adjacent to the Valencia Country Club.

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