Irvine-based Carpenter Community BancFund could soon own a hefty portion of San Luis Obispo-based Mission Community Bank, according to a bulletin released by the California Department of Financial Institutions this month. The bulletin said the CDFI had approved an application for the acquisition of control on Aug. 28.

The companies are now waiting for final approval from the Federal Reserve.
Mission Community Chief Executive Officer Anita Robinson said when Carpenter’s private placement investment in Mission Community closes, it could own as much as 24.9 percent of the bank’s shares. Also at that time, former California Commissioner of Financial Institutions Howard Gould is set to become the bank’s newest director.

“It increases our capital and it gives us access to a well known bank advisory group,” Robinson told the Business times. “The number of shares is an estimate right now but about $4 million in additional capital will be issued in the growth plan of the bank.”

Robinson said the new capital is unrelated to the more recent downfall of the banking industry.

“This is a commitment that was made prior to what we’ve seen take place during the first six months of this year,” she said. “The investment is still coming in as planned, just delayed because in order for someone to come in at a greater level, you have to go through the Federal Reserve approval process.”

Currently, Carpenter owns 9.8 percent of the bank’s shares. The bank announced Jan. 24 it had entered into an agreement with Carpenter for the fund to invest roughly $6 million into the bank and act as a strategic advisor to Mission Community. The deal called for the purchase of 333,334 shares of Mission’s authorized but unissued shares of stock for a purchase price of more than $17 each.

In February, the fund purchased an initial 108,000 shares totaling approximately $2 million, with the understanding that the remaining 225,000 shares would be purchased for about $4 million upon receiving regulatory approval.

“Anyone that owns more than 9.9 percent of the number of shares has to file a regulatory filing,” Robinson said. “There’s really no change in control from the kind of description you’d be accustomed to – nothing changes.”

As part of the agreement, Mission increased the size of its board of directors to include an individual nominated on behalf of the Carpenter fund.
Gould, a managing member of Carpenter Fund Manager and vice chairman of Carpenter & Co., will join the bank’s board as well as its corporate governance committee, technology committee and compensation committee.

In addition to his experience under the appointment of Gov. Arnold Schwarzenegger, Gould served as vice chairman of Bank of the West and vice chairman and operating officer of Sanwa/United California Bank.

For the six months ended June 30, Mission Community reported a net loss of $1.5 million, compared to a net income of $272,000 for the same period of 2007. The bank took a provision for loan losses of $2.5 million for the first half of the year, compared to a provision of $15,000 for the first six months of 2007. As of Aug. 1, the bank had approximately 1.1 million shares of common stock outstanding.

“Our fist six months have been like everyone else … We announced we took a large provision for loan losses in the second quarter, which then showed a negative earnings report for the first six months of the year,” Robinson said. “We believe that was a very aggressive and proactive measure and we feel like we’ve taken care of everything from a credit quality standpoint.”

Edward Carpenter, chairman and chief executive officer of Carpenter & Co. did not return two messages left by the Business Times.
The DFI was unable to supply further information regarding the acquisition of control because the documents had not yet been made public.