Meet Santa Cruz’s new ‘super-community’ bank: the merger of Lighthouse & Santa Cruz County Bank

David Heald, president of Santa Cruz County Bank, and Jon Sisk, president of Lighthouse Bank.

David Heald, president of Santa Cruz County Bank, and Jon Sisk, president of Lighthouse Bank.

There are some facts about Santa Cruz that many folks still find surprising: that the first words spoken from the moon were spoken into Plantronics’ Santa Cruz-built headset; that Felipe Kahn invented the cellphone camera here; that this is a capital of the digital biotech revolution.

Here’s another fun fact: For the past 10 years in a row, Santa Cruz has been home to not one but two of the nation’s top-ranking community banks. Those would be Santa Cruz County Bank and Lighthouse Bank. And now, those banks are merging.

John Sisk, president of Lighthouse Bank, calls the resulting new Santa Cruz County Bank a “super-community bank.” “There are 600 banks in the United States, from JP Morgan down to the smallest guy in some small town,” Fisk says. “And Santa Cruz County Bank has been ranked in the top 10 for a long time—for soundness, profitability, and multiple ranking systems. Furthermore, for just about that long, Lighthouse has been in the top 11.”

 “This is going to be a great thing for the community, especially the entrepreneurial community here in Santa Cruz,” Sisk says, pointing out that the new banking entity is launching a Venture Banking division (more on that below).

Mary Anne Carson, vice president and chief marketing officer for Santa Cruz County Bank, agrees that this merger is a big deal for the community, and points out that it was almost inevitable that it would happen someday.

“Santa Cruz County Bank and Lighthouse Bank were formed with similar missions,” Carson says. “We’re both very involved in the community. Culturally, we have much in common. If you look at the pie chart of our deposit mixes, they mirror one another significantly. A lot of us have worked together before and we know each other very well. We’re out there serving the same community.  So this is really a magical fit.”

Doug Fischer, Santa Cruz County Bank’s SVP for commercial real state and construction lending, says he too is excited about joining forces with the team at Lighthouse, many of whom he has worked with.

“Both banks are committed to providing loans to local businesses, and are heavily involved in the community, Fischer says. “Our employees serve on boards of the same nonprofits. We see each other’s employees out at different events, where they take time after work or even on weekends to get involved with these organizations. That’s what being a community bank means. The community sees that.  And that's something that resonated with me when I came on board with this bank.”

This kind of merger—of local banks of similar sizes—is rare in the banking industry, Carson points out. Ordinarily a major bank from out of town comes in to pick up more market share. And that really changes the dynamic of the banks.

 “This is very unique,“ Carson says. “It is historic for Santa Cruz because this is the biggest community-owned bank in Santa Cruz history.”

When the merger is complete, on October 18, the new Santa Cruz County Bank will have close to $1 billion in assets.

 Similar Origin Stories

Another reason this merger has a sense of inevitability is that the founders of both banks worked together years ago, at Coast Commercial bank, before it was purchased by a Bay Area group and eventually absorbed by Wells Fargo.

Soon after Coast Commercial was purchased by Greater Bay Bank Corp., David Heald, along with a nascent board of directors (all of whom are still on the board) decided to form a new local bank. After putting together the paperwork, they did what many start ups do. “We did an IPO,” Carson says. “We raised $13.2 million from local community members who were interested in having a local bank in the community again.”

 Meanwhile, Sisk and the team that would later go on to found Lighthouse Bank, stayed on at Coast Commercial / Greater Bay Bank. However, as time went on, Sisk says, “we realized that the arrangement just working out for customers here in Santa Cruz.” Along with Rick Hofstetter, Sisk decided to break away.

“Rick and I decided that there was room for another community bank, and so we set out to compete and also work alongside Santa Cruz County Bank.”

Sisk says both banks were mainly competing against the out-of -own banks, “the big guys—the Wells Fargo’s, the B of A’s, Comerica’s.”

Meanwhile, the personal friendships between the two banks remained. In fact, Sisk himself went to work for Santa Cruz County Bank for a couple of years before returning to Lighthouse.

“But as time went on, we found that we were competing more and more with Santa Cruz County Bank. And with our friendly relationship, our board and their board started discussing the fact that we should probably get together. And that if we got together, based on our capital, it would allow us to do much bigger loans.”

“Santa Cruz is maturing as a market. The dollars are getting bigger, and the companies are getting bigger and more successful. It makes sense that a community bank would want to keep up, as it were.”

 The New SC County Bank’s New Venture Division

Lighthouse Bank’s newest hire, David Apgar, will head the newly merged bank’s venture division—the first of its kind in Santa Cruz. Apgar, who spent a decade at CEB (now Gartner) before launching his own consulting business, says Santa Cruz’s startup community is ripe for a venture bank.

Apgar says there are plenty of organizations supporting startups such as Santa Cruz Works with whom he continues to support. Several Santa Cruz Works startups have been referred to the new Venture Division.

Stay tuned for more on Santa Cruz County Bank’s new venture division.