Irvine has emerged as a regional banking hub over the past year, reshaping the landscape of the industry in Orange County.
OC had one locally based bank with $1 billion in assets a year ago.
It’s now home to four, including one with more than $2 billion in assets, another on its way to that milestone, and two others above the $1 billion mark.
Irvine is ground zero for the trend, home to three of those four banks. A couple of them relocated headquarters to the city, and another surpassed $1 billion in assets with two recent acquisitions.
Then there are the regional offices of larger competitors such as Bank of America, Wells Fargo and Union Bank, among others.
The local shift started with Opus Bank, which moved to Irvine after a $460 million recapitalization led by Chief Executive Stephen Gordon in 2010. The bank first shifted its main office to the city, and it took about a year to go through regulatory requirements before making it the official headquarters.
A central location for Southern California, easy access to freeways and John Wayne Airport, the depth of Orange County’s business–port, the depth of Orange County’s business base, and a plentiful pool of local banking talent all lined up in Irvine’s favor, according to Gordon.
“We started by buying a bank in Redondo Beach, and we moved the headquarters down here quickly and centralized everything here in Irvine,” he said. “We have a solid presence up in Washington [state], but it still makes sense for us to be down here.”
Opus became the biggest locally based bank when it completed the changeover in headquarters late last year. It’s made two acquisitions over the past year-and-a-half, picking up regional banks in Fullerton and in the Seattle area, and now has nearly $2.5 billion in assets.
The acquisitions helped Opus land the No. 2 spot on this week’s Business Journal list of fastest-growing private companies here (see related stories throughout issue; list starting on page 36). Opus reported $121.7 million in revenue for the 12 months through June, a 1,200% jump from two years earlier.
The bank has 247 workers at its OC offices and branches, up from about 150 last year. The local headcount is more than half the bank’s total.
“Some might think the banking hub is in South OC or North OC, but for us, it’s right here” in Irvine, Gordon said.
Affluence
Irvine’s location amid affluent communities and vibrant business centers of its own and neighboring cities has also helped fuel its growing reputation as a regional banking hub.
“The economics of the county itself” makes OC a good place in general for financial institutions, and a “very favorable” place for banking offices, said Edward Carpenter, chairman and chief executive of Irvine-based advisory firm Carpenter & Co.
Carpenter is in a unique position to consider the trend. His private equity fund owns five banks, including Plaza Bank based in Irvine, Bank of Manhattan in El Segundo, San Jose-based Bridge Bank and San Luis Obispo-based Mission Community Bank. The firm also counts Pacific Mercantile Bank in Costa Mesa—the only locally based bank with more than $1 billion in assets that’s not based in Irvine—in its portfolio.
“Population per banking office is very high here, which makes it a great place for deposit-gathering,” he said. “That’s the lifeblood of banks. That would be the most significant argument for being here or branching here from a business standpoint. Also, as you grow in asset size, you often grow physically, and many of the banks—Plaza Bank being an example—more than doubled in size in the last couple of years.”
Plaza plans to consolidate its three OC locations—a headquarters, a branch and a lending office—under one roof at the Irvine Towers in November.
The move is expected to make room for future hires, according to President and Chief Executive Gene Galloway.
“We’ll dramatically increase our visibility in the Orange County market by being more centrally located in what is turning into ‘the bankers row’ of Orange County,” Galloway said. “Irvine is a hub for financial institutions, and it should be. It certainly was not immune to the recession, but it didn’t feel the wrath as badly.”
Plaza has about $400 million in assets, up roughly 23% from a year ago.
Another recent arrival to Irvine is Sunwest Bank, which moved its headquarters from Tustin last September. Sunwest looked at “14, 15 different properties, all in the Irvine and Newport Beach area,” according to Chief Executive Chris Walsh.
“This was a great economic move for us because it made us closer to the center of influence,” Walsh said. “Attorneys, CPAs, wealth management firms … many of them reside in the 10-mile [radius] here. We came to a quality-A building and also got top-of-building signage.”
Costa Mesa-based Pacific Premier Bank also is expanding, and will move into a building in the Irvine Concourse office campus, where the company will take nearly 45,000 square feet on two floors.
“We feel very fortunate to have entered into the lease when we did, as it appears that the office market is clearly strengthening,” said President and Chief Executive Steve Gardner. The bank has about $1.07 billion in assets.
First PacTrust
First PacTrust Bancorp Inc. has boosted business since it made a move up to Irvine from Chula Vista in March, amid the process of completing two separate acquisitions. The deals for Manhattan Beach-based Beach Business Bank and Cerritos-based Gateway Bancorp were completed this summer, and First PacTrust last month announced plans to buy Los Angeles-based Private Bank of California for $50 million.
Recent management changes have put Steven Sugarman as chief executive over the company and Robert Franko as chief executive of the subsidiary, Pacific Trust Bank, following the resignation of Gregory Mitchell as an officer and director of the company. Mitchell will serve First PacTrust as a consultant for up to six months.
The pending acquisition of Private Bank is expected to boost First PacTrust’s assets to $2.2 billion.
The trend that’s centered in Irvine goes beyond its city limits, according to Carpenter, who said it points to a larger metropolitan area that includes “the Fashion Island district and the airport district.”
He said he views that territory as a single market from a bank’s perspective.
“Also, it’s fair to say that the South Coast Metro area has by far the largest concentration of professionals outside of downtown Los Angeles,” he added. “And there’s now more class–A office space in the OC metro areas than there is in downtown L.A.”
