In Ed Carpenter’s Irvine office is a voodoo doll, a Buddha statue and a football signed by the 1979 Los Angeles Rams,not exactly the trappings you’d expect of an investment banker.
Carpenter has hundreds of items and trinkets of all sorts: coffee mugs, pens, antique postage tins, a hula doll, one of the last printings of British money in Hong Kong, a signed baseball from a top Japanese player and the key to the city of Cushing, Okla. He has 22 boxes in all, stuffed full of memorabilia he has received from banks he’s helped over the years. “A lot of this stuff goes way back,” Carpenter said. Carpenter is the founder and chairman of Carpenter & Co., an Irvine-based investment bank and consulting firm that has been behind hundreds of bank start-ups, mergers and acquisitions over the years. “Ed is a great guy and has been very successful for start-up banks,” said Robert Keller, chairman and chief executive of Laguna Hills-based Eldorado Bank. “He certainly has been a friend of the banking community in California for a number of years.”
In 1998, Carpenter helped Keller and The Dartmouth Capital Group buy Eldorado Bank, the largest bank headquartered in Orange County. (Last week, Eldorado announced plans to be bought by Utah’s Zions Bancorporation.) In his 30 years in banking, Carpenter said he has helped 458 start-up banks find funding, comply with government regulations and begin operating. His investment bank has helped raise $5 billion worth of capital for start-up banks, he said. “Many of the banks in California are here because of Ed Carpenter,” Keller said. “He has been very influential, especially at the community bank level.”
For new banks, Carpenter’s firm typically helps develop an application package for federal regulatory agencies. He and his 30-person staff also help formulate arguments for the public need for a new bank, raise capital and guide the bank through its business plan. Carpenter’s most recent start-ups are Newport Beach-based Pacific Mercantile, Rancho Santa Margarita-based South County Bank and Unity Bank, a Buena Park-based Korean-American bank that is working to get approvals to start operations. Carpenter said his firm is currently working on starting banking operations with three of the five largest insurance companies, though he cannot disclose what companies. Carpenter’s firm usually works with smaller banks, since larger, national banks already have their own consulting teams in place. But Carpenter said he’s done his share of work with big banks. Before banking reforms in the early 1990s, Carpenter helped Chase Manhattan Corp. do the first entry into California by an out-of-state bank, forming Chase Thrift and Loan in Fashion Island. At the time, banks couldn’t open branches in other states. By forming a deposit-taking industrial bank for Chase, Carpenter sidestepped the inter-state prohibition. Then there was the $1 billion merger between Pasadena-based IndyMac Bank and San Gabriel Valley Savings & Loan, which included changing IndyMac’s charter from a real estate investment trust to a thrift. Carpenter also has worked with former Philippines president Ferdinand Marcos on the California Overseas Bank and sat on the board of directors of Key Biscayne Bank with former president Richard Nixon. Larry Luckey, chief operating officer with Irvine financial services firm First Web Bancorp, said he has tapped Carpenter on several occasions. “He has offered some very sage advice in structuring a bank, how to move forward in business plans and working with regulators,” Luckey said. Carpenter helped Luckey acquire the assets of a failed bank through the Resolution Trust Corp. in the early 1990s. He helped Luckey save a bank, Pacific Inland Bank, which was handed four cease-and-desist orders from the Federal Deposit Insurance Corp. and was on the verge of failure. “Ed put his reputation with the regulators on the line to save the bank,” Luckey said. When Luckey wanted to sell a company he founded,eFunds Corp.,to Deluxe Corp., he also turned to Carpenter. “We leaned on him and (Carpenter & Co.’s) John Fleming as we went through the negotiations. They were much more versed in that then we were,” Luckey said. Between 1989 and 1994, the federal government tapped Carpenter to manage $12 billion in assets from failed banks, including Columbia Savings, Home Federal and American Continental, Charles Keating’s thrift. The Resolution Trust Corp. was formed in 1990 by Congress to liquidate the assets of hundreds of failed banks. But the job proved too big. “They couldn’t hire enough people,” Carpenter said. Carpenter & Co. was one of 88 firms with which the Resolution Trust contracted.
“We had a substantial RTC business,” Carpenter said.
During the early 1990s, Carpenter & Co. was one of the five largest Resolution Trust contractors, according to Carpenter. Others included J.E. Robert Co. and BEI Amresco. These days, technology is changing the banking industry, Carpenter said. The U.S. is heading toward the European system of banking, with fewer banks, he believes. With the Gramm-Leach-Bliley Act being passed last year, the banking industry has free range to merge with or acquire other financial services companies, something counterparts in Europe have been doing for several years. The branch system also is changing, he said.
“The vision of our future is in Scandinavia where banks have no need for branches,” Carpenter said. In Northern Europe, people are less inclined to face the cold and snow-covered streets, he said. So more people use the Internet and their mobile phones to perform banking transactions. “Over there, 90% of banking transactions are done online,” Carpenter said.
Carpenter said his firm raises money for and invests in Internet companies and technology start-ups that are developing applications for the banking industry. He said he also is working with a few large technology companies to help them implement software within the banking industry. n
