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FINANCE: Sees ‘once in a 100-year moment’

 When the economy’s faltering, Stephen Gordon sees opportunity.
After the dot-com bust in 2000, he co-founded Commercial Capital Bancorp, which was sold for almost $1 billion in 2006.
Following the 2008 financial crisis, the longtime Orange County banker in 2010 led the $460 million recapitalization of Bay Cities National Bank and renamed it Opus Bank, which was sold for $743.9 million last June to crosstown rival Pacific Premier Bancorp of Irvine (Nasdaq: PPBI).
Five days after that deal closed, he filed paperwork to start his third venture—Genesis Bank—even though it was in the middle of the coronavirus-induced recession.
“I have a tendency to start banks in contrarian times,” Gordon told the Business Journal. “This is a once in a 100 year moment.
“The whole world fell apart and there’s a huge need for a new bank that has no legacy issues, no legacy employees, no legacy tech, no complex legacy structural issues.”

Half of Capitalization
Genesis Bank was incorporated in December and is based in Newport Beach.
It will focus on small- to medium-size commercial businesses and investors in multifamily real estate ventures, including specialty niches around escrow, Gordon said.
At the time Gordon said he was starting Genesis, news reports indicated the new bank’s organizers were looking to raise $53.3 million in initial capital.
Gordon represents about half of the company’s capitalization; other investors include a social-focused fund, he said.
While Opus went public, reaching a market cap that topped $1 billion at times, Gordon said Genesis will stay private “as long as it makes sense.”
Regulatory filings pertaining to Genesis’ incorporation indicate the bank counts 150 million shares of common stock and 50 million shares of preferred stock, which is convertible into common stock at $10 a share.

Few Branches
One of the key differences for Genesis Bank compared to prior Gordon ventures will be a lack of branches.
Gordon will have an office in Newport Beach and maybe in Los Angeles as it focuses on Orange County, Los Angeles and the western half of the Inland Empire.
“Because of COVID, everyone’s learned to bank without branches,” he said. “At Opus, we had 50 branches up and down the coast.
“All that legacy infrastructure is so unnecessary. Human behavior has changed. Yet there is still a need for high-quality bankers to meet with you in person.”
Gordon is following a trend as Irvine-based banks like CommerceWest Bank and Nano Banc have grown assets tremendously, even though each has only one office.
On this year’s Business Journal list of 43 banks operating in Orange County, 21 have three or fewer branches (see story, page 34).
One area of infrastructure is key to Gordon’s new venture: he said Genesis is building a new technology platform that will include “highly robust” treasury management.

Giving Back
Gordon criticized the larger banks for not quickly reacting during the pandemic to programs like the Paycheck Protection Program, which the federal government introduced last April.
“They had an opportunity to stand up and lead,” Gordon said. “Much of the banking system did not. I feel very committed to give back to the community. Now is our time to build.”
The Federal Deposit Insurance Corp. on Jan. 29 and the California Department of Financial Protection and Innovation on Nov. 4 approved the new bank, subject to conditions relating to the establishment of de novo banks.

New Beginning
Gordon departed Opus Bank in 2018, with the board saying the company needed “new leadership.” At the time, he owned 6% of the shares worth around $60 million. Gordon applauded last June’s sale of Opus to rival Pacific Premier.
Gordon said he chose the name Genesis because it’s “a new beginning.”
The bank will most likely be open for business around May, he said.
Gordon’s already attracted his crew that helped him build Opus into the second largest bank by assets in Orange County: Jennifer Simmons, president and chief operating officer; Brian Fitzmaurice, senior chief credit officer; William Han, chief financial officer; and Andres Gallardo, chief legal and risk officer
“I’m a young guy and I got a phenomenal team that’s very motivated to make a difference,” he said. “Each member of our team brings unique, highly relevant, and extensive skills and experience necessary in their respective roles and responsibilities in creating and building this new bank. We have the benefit of having worked extensively together as a team in the past.” 

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.
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