Sunrise Community Bank to open in Palm Desert. Check it out:
(Press-Enterprise, The (Riverside, CA) (KRT) Via Thomson Dialog NewsEdge) Sep. 26--A billion-dollar financial holding company that specializes in launching small community banks plans to jump into the Coachella Valley's increasingly crowded lending market in Palm Desert.
Lansing, Mich.-based Capitol Bancorp Limited will provide 51 percent of the initial investment in Sunrise Community Bank, which is scheduled to open in January.
Stu Bailey, a veteran desert banker who is president of the proposed bank, his staff and board of directors will raise the other 49 percent, just under $4 million.
It's an unusual strategy that has worked well for Capitol Bancorp, Bailey said. The company, founded in 1988 by Joseph Reid, has chartered 47 banks in 13 states, including nine in 2005 and seven in 2006, according to its Web site.
Reid couldn't be reached for comment.
Sunrise will be the 52nd or 53rd bank by the time it opens, Bailey said.
Each bank is managed by its own president and a local board of directors and has full decision-making authority. Sunrise's board includes several well-known business and civic leaders, including former Palm Springs Mayor Will Kleindienst.
New banks are typically funded entirely by investors, who are able to cash out within several years if the bank goes public and the stock does well.
Capitol Bancorp's strategy allows investors to cash out after three years by selling their stock back to the company or by trading it for shares of Capitol Bancorp.
That's where fellow Capitol Bancorp start-up Bank of Escondido is now, said president Mike Peters. Founded in 2003, Bank of Escondido was profitable within eight months, about a third of the time it takes a typical new bank.
"I have done a new bank the old-fashioned way and this way, and this has been a great ride," Peters said, adding that Capitol Bancorp also provides back-office support.
The company also uses an unusual strategy to decide on new locations: "They search out good community bankers around the country rather than searching out certain communities," said Bailey, who was recruited by Capitol Bancorp.
Sunrise will face competition, as the Coachella Valley has seen steady banking expansion, and there are now four desert-based institutions.
Palm Springs-based Canyon National Bank recently added its fourth branch, while Palm Desert's El Paseo Bank, with two locations, plans to add three more by 2011.
The oldest, Palm Desert National Bank, has $300 million in assets and three branches in the Valley, while the newest, Desert Commercial Bank founded in August 2005, has said it plans to be profitable by the end of the year.
Bailey said small businesses are an underserved market, however, and he will target that group, as well as nonprofit organizations and homeowners associations.
Sunrise, which will start with 12 employees, will lease an 8,160-square-foot building in a new office park at Cook Street and Hovley Lane in Palm Desert.
The location is important because the bank will have only one branch.
"The whole philosophy is that you are a community bank, and the premise is that the president sits in the corner office by the front door and gets to know all the customers who come in. You can't do that with three or four branches," Bailey said.
CAPITOL BANCORP LIMITED
Headquarters: Lansing, Mich.
Assets: $3.7 billion
Ticker symbol: CBC
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Copyright (c) 2006, The Press-Enterprise, Riverside, Calif.
Distributed by McClatchy-Tribune Business News.
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