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Local Bank Charts New Course for Acquisitions

CapitalSource Bank plans to become a commercial financial institution to gain access to new customers and have options for future growth. Also, the bank’s parent company CapitalSource Inc. will morph into a bank holding company. CapitalSource Bank, headquartered in downtown Los Angeles, currently operates under an industrial loan charter, which prohibits it from expanding through acquisitions. The bank has four branches in the greater San Fernando Valley region – Studio City, Tarzana, Northridge and Westlake Village. It offers a variety of real estate lending, equipment financing and personal banking services in savings accounts, certificates of deposit and money market accounts. Current customers would not notice much change in the bank’s operations following the charter change. Receiving a commercial charter is beneficial for the new clients the bank can bring in, said Jim Pieczynski, the president of CapitalSource Bank. “It allows us to attract customers we do not have access to,” said Pieczynski, who is also chief executive of parent company CapitalSource Inc. CapitalSource is a publicly traded company on the New York Stock Exchange. As a bank holding company, the company would be under federal banking regulations and would register with the Board of Governors of the Federal Reserve System. As part of the application review process, representatives of the Fed would make a visit to the CapitalSource offices, Pieczynski said. There are other benefits as well for the bank converting its charter. For one, CapitalSource would be able to pursue acquisitions of other banks, an option not available under the industrial loan charter. Also, CapitalSource could reduce its risk-based capital requirement and make it more in line with competitors. Currently, the bank must have about $15 million in capital set aside for every $100 million in loans. “Our peers are closer to a 12 percent risk-based requirement,” Pieczynski said The most recent data available, filed for the quarter ending Sept. 30, shows CapitalSource Bank had $8.7 billion in assets and deposits of $5.5 billion. The bank reported net income of $31 million (14 cents a share). Glendale Merger Glendale accounting firm Hutchinson & Bloodgood LLP expanded its audit practice with the recent merger of the Los Angeles area office of PKF California. The PKF client roster brings another niche market to Hutchinson & Bloodgood because of its specialized focus on the hospitality and leisure services industries, said Hutchinson & Bloodgood partner Peter Weir. The more industry niches the firm serves, the better for its long-term stability, Weir said, adding, “it gives us one more vertical market that we can play in.” The PKF staff, headed by directors Mark Hennelly and Rex Poulsen, moved from their Glendale office to those of Hutchinson & Bloodgood just a few blocks away. Weir described PKF Los Angeles as an audit-centric firm not involved with tax work. PKF Los Angeles was looking to position its office to provide its services to clients outside the hospitality and leisure industries while Hutchinson wanted to augment its audit practice and U.S. Securities and Exchange Commission work, Weir said. The merger has created a new challenge in terms of accommodating the combined staffs. “We are full up and out of space,” Weir said. “We are looking to negotiate a new lease in the next six months.” Nasdaq’s Bank Index California United Bank has been added to the American Bankers Association Nasdaq Community Bank Index. The inclusion of the Encino-based bank on the index raises its profile with investors and could bring appreciation to the bank’s shares. “It benefits the shareholders and gets our story out there that we are the pre-eminent business bank in Los Angeles, Ventura and Orange counties,” said Karen Schoenbaum, chief financial officer with the bank. The ABA launched its index in 2003 to create a representative list of community banks. California United has eight branches ranging from Thousand Oaks to Santa Clarita to Irvine. The bank also has a loan production office in Irvine. For the third quarter ending Sept. 30, California United had total assets of $1.27 billion and deposits of $1.1 billion. More good news for the bank came from Fig Partners, an Atlanta broker-dealer specializing in financial institutions. In a research report issued Jan. 11, the firm listed California United for probable inclusion on the Russell Index 2000 when that list is updated in June. Getting onto these stock indices is yet another way that California United can raise visibility in the investing community. In October, the bank moved from over-the-counter bulletin board trading to the Nasdaq Capital Market. Representatives of the bank were at the Nasdaq Market Site in New York City on Oct. 10 to ring the bell at the start of the trading day. Staff Reporter Mark R. Madler can be reached at (818) 316-3126 or at mmadler@sfvbj.com.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

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