Local financial industry professionals are banking on an improving U.S. economy that could feed business growth here.
“We’re seeing the impacts of the economy’s growth in all facets of our business lines, [including] our small-business banking and international banking,” said Tony Sciarrino, market executive of the California Coastal Banking Region at Bank of America.
Private equity firms nationwide are likely to see strong activity continue next year, thanks to an abundance of capital available in the market, said Dan Lubeck, managing director of Solis Capital Partners. Lubeck, whose Newport Beach-based firm is looking to close a handful of deals in coming months, said he will still watch out for a “correction” in the market in a year or so, since debt-raising has been strong for some time.
Employment expectations in the local finance sector have recently dampened. Chapman University said the number of financial services jobs in OC is expected to decrease 1% next year to 108,647, while the local economy’s overall job base is expected to grow 3% to slightly more than 1.5 million.
People to Watch
The new team-oriented leadership structure at Pacific Investment Management Co. is a contrast to its long-standing structure of having Bill Gross and Mohamed El-Erian as the primary faces of the company.
Gross and El-Erian have left, and Pimco now runs under Group Chief Investment Officer Daniel Ivascyn and co-CIOs Andrew Balls, Mark Kiesel, Virginie Maisonneuve, Scott Mather, Mihir Worah, and Marc Seidner.
We’ll keep an eye on how they grow Pimco’s business this year, both bonds and equities, after a year of much outflow and generally mediocre performance.
We’ll also watch how Mather, Kiesel and Worah run the Total Return Fund, the world’s biggest bond fund that had been managed by Gross. Mather, at a recent conference in Newport Beach, said the transition of fund management was “seamless” and that there’s “nothing surprising about what’s in the portfolio.”
Company to Watch
Pacific Mercantile Bancorp
Pacific Mercantile should be a compelling story now that it has cleaned up its balance sheet and “built its earnings engine” with an eye on faster growth next year.
The Costa Mesa-based bank holding company, which has about $1 billion in assets, has been working on building capital and reducing bad assets, such as “other real estate owned.” Efforts included liquidation of its mortgage division over the past year or so, and a “reconstruction” of the bank’s products to include “advanced loan structures and ancillary products, such as interest rate swaps,” according to Chief Executive Steven Buster.
He says the bank is now REO-free, has healthy capital ratios, and is “far more focused as a relationship-driven business bank.”
We’ll see how Pacific Mercantile grows its loans in various niche markets, including technology and entertainment. Buster says its backlog “is extremely healthy to carry into 2015.”