Costa Mesa-based Pacific Mercantile Bank has ramped up its entertainment financing business, an area that has become a key contributor to growth as the bank sharpens its focus on commercial lending.
Recent movie financing deals for the bank include a loan to Mike and Marty Productions for its legal thriller “Beyond Deceit,” which stars Academy Award winners Anthony Hopkins and Al Pacino. The movie is set for release in February 2016.
Pacific Mercantile also has provided financing for “Damascus Cover,” which stars Golden Globe winner Jonathan Rhys Meyers and recently completed production in Morocco. The distribution rights for the movie are currently being sold by Carnaby International.
Pacific Mercantile set up its entertainment industries division in 2009.
Senior Vice President Adrian Ward began heading the Beverly Hills-based unit this year after the retirement of Art Stribley, who founded the group.
The division provides various services, including gap financing, lines of credit and cash management. It’s made more than $225 million worth of loans to independent film and television production companies.
The loan amounts for “Beyond Deceit” and “Damascus Cover” weren’t disclosed, but the bank said a typical transaction can range from $1 million to $15 million.
“In general, when we do film production financing, we are supplementing equity with our debt in order to complete the production of a film,” said Tom Vertin, president of commercial banking. “We also finance tax incentives that are provided by various states or in some cases provinces … in order to induce film production taking place in their regions. We’ll also finance the gap between the full distribution rights to films and the remaining distribution rights yet to be sold.”
Vertin said the entertainment industries division has seen “a marked increase in film production activity” since Ward took charge.
“In fact, in the first quarter of 2014, I believe we did one film production loan. In the first quarter of 2015, we did five,” Vertin said. “And I anticipate that brisk pace to continue. We are financing film production of both movies and television, and we’re working with producers that we’ve had a relationship with for quite some time. It’s one of our best-performing loan portfolios.”
The division’s loans topped $88 million in 2014, up from about $63 million in 2013 and $44 million in 2012.
“This is an industry where we have made a larger investment in terms of people and other resources,” Vertin said. “And this is an industry where we think our presence will grow quite substantially over the short and midterm.”
Pacific Mercantile, headed by Chief Executive Steven Buster, is among the largest commercial banks with headquarters in Orange County. It had about $1.1 billion in assets as of the end of the first quarter.
The bank has been working to strengthen its commercial banking emphasis and transition away from a real estate focus, including by closing its mortgage divisions and restructuring its Small Business Administration lending team.
It is owned by Irvine-based bank adviser and private equity firm Carpenter Community Bancfund.
