Debit Card Company Takes a Run at Utah Bank

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Green Dot Bank?

A funny name for sure – but it’s not out of the realm of possibility.

Green Dot Corp., an issuer of prepaid debit cards that made news last week with plans for a $150 million IPO, has been quietly pursuing plans to operate its own bank.

The Monrovia company has filed papers to acquire the small, single-branch Bonneville Bancorp, based in Provo, Utah, which would make Green Dot a bank holding company.

Green Dot currently issues its reloadable debit cards primarily through Columbus Bank and Trust Co., based in Columbus, Ga., and GE Money Bank, a subsidiary of General Electric Co.

However, with the bank acquisition, Green Dot said in its IPO prospectus that it could reduce its card issuance costs as well as “increase the efficiency with which we introduce and manage potential new products and services.”

According to a Feb. 22 notice in the Federal Registrar, Green Dot plans to acquire 100 percent of the voting shares of the holding company, which owns Bonneville Bank.

The company has not announced plans to increase the size of the bank or change its name, and declined to comment due to its IPO-related quiet period.

Founded in 1999 as Next Estate Communications, Green Dot is considered the market leader in the prepaid card industry. The cards are available at tens of thousands of retail stores, including Wal-Mart, CVS and 7-Eleven locations.

In its prospectus, the company said operating revenue was up 39 percent in fiscal 2009 to $235 million, while operating income was $64 million, a 118 percent increase.

In addition to its proposed acquisition, Green Dot said it plans to use proceeds from the IPO for general corporate purposes. The company did not announce a date for the offering.

Startup Firm

With private equity backing, asset manager Paul Hechmer has started his own asset management firm in Los Angeles.

Launched last week, the new firm, Del Rey Global Investors LLC, will invest primarily in international and global companies believed to be undervalued and with market caps exceeding $1 billion.

Del Rey will offer four investment strategies, including investing in foreign companies through both offshore exchanges and American depository receipts. The firm is targeting institutional and high-net-worth investors, but eventually plans to start an open-end mutual fund.

“In our view, the market turbulence and investor uncertainty that has defined the past two years has helped to create the conditions for active value managers like us to excel,” said Hechmer, the firm’s chief investment officer, in a statement. Hechmer previously helped found Tradewinds Global Investors.

Northern Lights Ventures LLC, a Seattle-based private equity firm investing in boutique asset management firms, is backing Del Rey with an undisclosed amount of money.

Portfolio Add-on

Mergers and acquisitions activity may be down, but some private equity firms are still active.

Gores Group LLC plans to acquire Peco II Inc., a power conversion company headquartered in Galion, Ohio. The deal will supplement another Gores Group portfolio company, Lineage Power Holdings Inc. in Plano, Texas.

The $17 million acquisition is expected to close in the second quarter.

Gores Group, a Westwood firm founded by billionaire investor Alec Gores, specializes in acquiring mature companies in the technology, telecommunications, business services and industrial sectors.

C-Suite News

Manhattan Bancorp, the El Segundo parent of Bank of Manhattan, announced that Deepak Kumar has been appointed chief executive, replacing Jeffrey Watson, who resigned Feb. 9. Kumar was previously chief operating officer of Schwab Bank. … City National Corp. announced that Robert Tuttle was elected to the boards of both the L.A. bank holding company and its subsidiary, City National Bank. … PennyMac Mortgage Investment Trust, a Calabasas REIT established by former Countrywide executives to invest in distressed mortgages, announced that Michael Muir has resigned from his position as chief investment officer. Vandad Fartaj, a managing director with the firm, was appointed to replace Muir. … California United Bank, headquartered in Encino, announced that David Peskin was hired as senior vice president of commercial banking. Peskin is the latest in a string of hires from First Regional Bank, a Culver City institution recently closed by regulators. … Preferred Bank, a Chinese-American institution in Los Angeles, announced that Lucilio Couto was appointed acting chief credit officer, replacing Robert Kosof, who has become the bank’s head of commercial lending and regional manager of the West L.A. operations.

Staff reporter Richard Clough can be reached at [email protected] or at (323) 549-5225, ext. 251.

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