Downtown Bank in Organization Raises Record $21 Million in Capital

Embarcadero Bank, a community bank in organization in downtown San Diego, raised $21 million in startup capital this past summer, a record sum for a new local bank.

Steve Rippe, chief executive, said the bank, which has been in organization since March, is awaiting regulatory approvals from the Federal Deposit Insurance Corp. before opening its doors, probably in December or January.

“We expect (the approvals) any day,” he said. Rippe said the national FDIC office had to review the bank’s application because one investor held more than 9.9 percent of the stock. He did not identify the investor, a private equity fund that specializes in investing in community Banks.

The $21 million raised from 30 investors was the most of any new bank organized here, according to the state Department of financial Institutions.

The previous record of $20 million was held by Torrey Pines Bank, which opened in 2003. Most of that money was provided by parent Western Alliance Bancorp. of Las Vegas.

Most new Banks, called de novos, raise between $8 million to $12 million in capital to launch operations.

Rippe said the amount raised was “a balancing act.”

“You want to make sure you raise enough capital to sustain the business for three to five years. But you also don’t want to raise too much so that it’s difficult to generate good returns.”

With more capital, the bank has to place more loans to obtain above average returns.

With $21 million, Embarcadero Bank would have the ability to lend $5 million in a secured loan and about $3 million unsecured.

Rippe said the target loan size would be about $1 million, mainly focused on commercial real estate such as office, mixed-use and apartment buildings.

Rippe named Maria Kunac as his president, and Steve Cooper as his chief financial officer.

Kunac, a 25-year veteran banker, was most recently the chief lending officer at Imperial Capital Bank. Cooper worked at Highland Bancorp, while Rippe was that savings bank’s president.

Rippe has been in banking more than three decades, and was president of three Banks, First National Bank (for only about nine months); Highland Bancorp in Burbank; and Security Pacific Bank of Nevada.