Banks and financial advisers are heading into 2013 with mixed feelings.
Clouds hanging over the financial industry include the cost-of-capital implications of the Dodd-Frank Act—which has yet to fully play out—and the Consumer Financial Protection Bureau’s emergence as a watchdog that has led many banks, credit unions and other financial companies to tighten their business practices.
Other concerns for lenders and borrowers alike include anticipation of federal tax hikes and spending cuts next year, as well as prospects for a continuation of low interest rates.
They’ll face all that with some firm footing. The past year has been generally strong for banks based in Orange County or with significant operations here.
The four largest banks based here—Opus Bank, PacTrust Bank, Pacific Mercantile Bank and Pacific Premier Bank—have combined to end the third quarter with $6.53 billion in assets, up 38% from a year earlier.
They combined for $60.4 million in profit through the first nine months, compared with a collective loss of $38.7 million a year ago, which came primarily from losses at one bank.
Helpful Demos
Wealth management will likely get a boost from demographics trends, with increasing numbers of baby boomers reaching retirement age.
The wealth management division of Merrill Lynch has prepped for the coming year by hiring steadily throughout 2012 and developing new initiatives based on specific investor trends.
“A big part of where we’re trying to improve next year is our ability to manage people’s wealth through behavioral assessments,” said Chandler Root, southwest regional director of the firm’s Global Wealth and Investment Management division.
“As you look at this decade and next, as the boomers retire and move into the last third of their lives, the need for financial-advisory services is becoming more and more important,” he said.
Root added that he hoped to see a pickup in mergers and acquisitions activities next year.
“2012 was not a great year for M&A,” he said. “Large-market activities were slower. We’d certainly like that to change. Large-market M&A is a sign of a healthy market.”
PERSON TO WATCH: STEVEN SUGARMAN
The Business Journal will keep an eye on Steven Sugarman, the recently named chief executive of Irvine-based First PacTrust Bancorp Inc.
Sugarman took the post shortly after the holding company of PacTrust Bank announced in August it was buying Los Angeles-based Private Bank of California.
The new chief said he intends in 2013 “to integrate our banking subsidiaries together into a single commercial bank.”
First PacTrust bought Beach Business Bank as part of its transition from a unitary thrift holding company. It now has $1.6 billion in assets and will pass the $2 billion mark when it closes on its acquisition of Private Bank. That would make it the second-largest bank in OC, though as a thrift it wasn’t included on the Business Journal’s list of locally headquartered banks published in November. It is likely that First PacTrust will be high on the list next year, close to the current largest bank, Irvine-based Opus Bank.
—Jane Yu
COMPANY TO WATCH: SABAL FINANCIAL GROUP LP
Newport Beach-based Sabal Financial Group LP enters 2013 poised for additional growth and ready to invest further within the company.
The financial services firm, which specializes in distressed debt and manages about $4 billion in assets, recently doubled the size of its headquarters and expanded its Pasadena office more than threefold to 10,000 square feet “to allow for additional growth in 2013,” said Chief Executive Pat Jackson.
Sabal plans to add another 100 employees to a current base of about 80, Jackson said.
Sabal’s lending activities in 2013 will bear watching.
Its original business model focused on managing portfolios of troubled loans, mostly tied to land and real estate properties.
It recently has started two new programs, one geared toward infill homebuilders and another for commercial real estate, a new area for the company.
There are several new projects in the works, and Sabal is looking to expand its “lending footprint into select markets beyond the West Coast,” Jackson said.
—Jane Yu
