Count Five Star Bank among the lenders seeking to swoop in after the collapse of First Republic and other banks that catered to Silicon Valley businesses – except the Sacramento-area bank’s CEO makes a notable distinction.

“We’re not from the East Coast,” said James Beckwith, who’s been at the helm of the bank since 2003. 

“We’re a Northern California bank, we understand that market,” he said. “We’ve been involved in the Bay Area for a long time, growing up there. We all understand that there’s various parts of the area that are distinct.”

The “great turmoil” of spring 2023, with the failures of Silicon Valley Bank, Signature Bank and First Republic, presented a prime opportunity for $3.7 billion-asset Five Star Bank to go after talent and banking relationships in the San Francisco Bay Area, Beckwith said.

“Geographically, it's not that far removed from us,” he said. “But historically, it was a market in which there was no way to enter it, and so we never really thought much about it.”

When those lenders failed, East Coast banks moved in quickly: Raleigh, North Carolina-based First Citizens purchased Silicon Valley Bank’s assets, New York Community Bank bought a large portion of Signature Bank’s assets, and New York City-based JPMorgan Chase acquired the majority of First Republic’s assets. 

Now – as former First Republic customers express frustration over JPMorgan’s service – Five Star Bank is betting its California roots will appeal to those clients.

Five Star, based in Rancho Cordova, has hired 21 people since June 2023, and aims to double that number over the next two years, Beckwith said. Hires have come from First Republic, Signature Bank and California Bank of Commerce, he said. One recent addition is Jeff Winkel, who spent more than two decades at First Republic.

“We think those opportunities still exist,” Beckwith said of further hiring, “as we continue to build and show ourselves in the marketplace as a successful organization and one that's very employee-centric.” 

The bank has about 200 employees and eight offices.

Additionally, the lender is opening a 3,700-square-foot office space in San Francisco’s financial district in September, Beckwith said. “We’re just walking over what we’ve done historically, and developed historically, and bringing it into the Bay Area,” he said. 

A public offering the bank closed in April, raising $81.5 million, is fueling those investments. Beyond talent acquisition, Beckwith suggested the bank may consider purchasing another lender, as the operating environment has strained community banks.

“We’ve always been an organic growth shop,” he said, “but there may be opportunities for us to look at other organizations to see if they’re like-minded and would want to join us.” 

The commercial bank’s customers are generally small to medium-sized companies generating between $1 million and $200 million in revenue, Beckwith said. Given the sizable market and the prevalence of Silicon Valley entrepreneurs, “over the next five years, we think we can grow the franchise by up to 1 billion dollars just in the Bay Area.” 

The bank doesn’t offer wealth management services and doesn’t plan to, Beckwith said, noting that’s a “very competitive space.” Providence, Rhode Island-based Citizens Bank has snagged former First Republic bankers to help it build out its wealth-management presence and scale its business banking footprint on the West Coast. 

Five Star’s business model is most closely aligned with that of First Republic, with a high-service, technology-focused approach, Beckwith said. “That's the expectation of a lot of these customers of the old FRB, who were really well-serviced and well cared for,” he said. That, in turn, fostered a strong sense of loyalty among those customers, he added.

The high-touch service approach is crucial to those commercial customers, Beckwith said.

“It’s having a relationship with somebody they can pick up the phone and call; somebody that’s going to return the call immediately; somebody that’s going to be on their business premises to visit them, to check in on them, how they’re doing,” Beckwith said, noting that Five Star doesn’t have 1-800 numbers.

“We think there's a great niche for us to provide that community bank service,” he said.