Another bank is in formation in Orange County, but California First National Bank in Santa Ana is not going to act like most other banks.
The bank is being formed under the direction of Amplicon Inc., an equipment leasing company that wants to use the bank to provide lower-cost funds for its operations. Amplicon is the sole investor in the bank and capitalized it with $20 million of its own cash.
Amplicon purchases primarily technology equipment such as computer networks, mid-range computers, computer software, peripherals, work stations, telecommunications equipment, computer automated design and manufacturing equipment and office automation equipment and then leases it to its customers. Amplicon has 150 employees, all in OC.
The bank will primarily be a tool for Amplicon to capture the revenue it has produced for other financial institutions. Currently Amplicon sells its lease receivables to financial institutions for capital to buy more equipment and make more leases.
“Amplicon always passed off the credit risk to other companies,” said Leslie Jewett, Amplicon’s chief financial officer.
Amplicon plans to sell all of its leases to the new bank. California First also will try to purchase lease receivables from other equipment leasing companies. It will make loans to businesses for leased equipment, essentially buying the assets from Amplicon, but will not issue any consumer loans or traditional commercial loans.
The bank plans to take deposits from Amplicon’s customers and offer traditional deposit products such as certificates of deposit and savings accounts.
“Our prime intent is to purchase lease receivables,” Jewett said.
Jewett said the lease receivables are a lucrative investment vehicle that will allow the bank to offer higher yields on deposit products such as certificates of deposit and savings accounts. Jewett said the bank expects to be profitable in two to three years.
“We will have to grow gradually,” she said.
While the formation, approval and opening process of a bank usually takes 12 to 18 months, California First is almost to its third year of formation. The bank filed its application in June of 1999, but approval has been held up because of the unique nature of the bank’s business model.
“We are the one that set the precedent,” said Colin Forkner, chief executive and president of the bank.
“It’s frustrating, but we’re patient. It is a patient business we are in,” Forkner said. “Thank God we have deep pockets.”
The delay in approval caused a few problems for the bank, especially since it already hired several employees who had to just wait until approval.
“We were running up a nice tab,” Forkner said. To keep the employees busy, Forkner found them temporary jobs with Amplicon.
“That’s the risk you take when you go into business,” Forkner said.
The bank now expects to get final approval soon and open its doors by September. n
