Harbor National Bank, which added a second branch in 2000 and nearly doubled its assets in the past year, is seeking capital for further expansion.
“At the current amount (of capital) we would be capped out at $80 million in assets,” said David Blankenhorn president and chief executive of the bank. Harbor National has $72 million in assets,up 75% from a year ago, Blankenhorn said,and is looking to raise up to $5 million in additional equity, which would allow the bank to reach $150 million in assets. And with more capital, the bank will be able to offer products to larger customers and increase its lending limits.
Harbor National may have some trouble convincing investors, as it was not profitable last year or in 1999.
But Blankenhorn noted that the bank was profitable in the first quarter of this year, and blamed last year’s net loss on the expense of opening a new branch and an increase in loan loss reserves made necessary by its rapid growth. Blankenhorn said once loan growth levels off, the bank will have to contribute less to the reserves.
Blankenhorn said the bank will also use new funding to open new branches, preferably in South County but maybe in Anaheim, or to make an acquisition. The bank is trying to concentrate on South County, and opened a branch in Newport Beach last year.
“(Newport Beach) is the financial center of the county. We knew we had to grow and expand to other places. We are growing here (Dana Point), too. But not at the same rate,” Blankenhorn said. The bank changed its name in 1999 from Dana Niguel Bank to reflect its desire to become more than just a municipal player.
The bulk of Harbor National’s growth has come in construction and commercial real estate loans, a segment that has some banking regulators like the Federal Deposit Insurance Corp. and the Department of Financial Institutions worried. Heavy involvement in real estate loans sent many banks to the grave in the early ’90s, when a drop in real estate values caused many loans to fall delinquent.
Most independent bankers have been more careful lately, remembering the not-too-distant past.
“A lot of us have been around a while, and we’ve been through the good and bad times,” said Blankenhorn, a 36-year industry veteran.
There have been several startups in OC in the past two years, and Harbor National isn’t the only local bank doing well. Pacific Mercantile Bank, Newport Beach, posted a 78% gain in assets to $163 million in 2000. And the 21-year old Pacific Western National Bank in Brea, which has four branches, had 22% growth in assets last year to $190 million. n
