Fears from a year ago that banks in Orange County could face a shellacking because the pandemic would force massive defaults by borrowers proved to be overblown.
The 43 banks on the Business Journal’s annual list grew their Orange County deposits by an average 23% to $151.2 billion. By contrast, deposit growth was 5.4% in 2019, 2.1% in 2018 and 9% in 2017.
Bank of America Corp. for the third straight year claimed the top spot as its deposits climbed 13% to $27.1 billion as of mid-2020, an astounding $3 billion increase.
The bank in 2019 focused on educating customers and employees on how to use its technology services, said Bayo Thomas, BofA’s Orange County consumer executive.
“That education paid off—once the pandemic hit, we saw a faster adoption by our clients to gravitate to self-service,” he said. “The fact is it was clear early on—the way people would do their banking changed drastically” due to the pandemic, Thomas said.
Wells Fargo, the previously largest in Orange County, has stopped the drain of its deposits following a national account fraud scandal. Last year, its OC deposits fell 2% to $22 billion. This year, it recuperated by growing deposits 21% to $26.7 billon. Its employee count fell the most on the list, dropping 16% to 2,267.
No. 3 JPMorgan Chase & Co. reported a 28% rise to $21.5 billion.
The list ranks banks with headquarters or significant operations here and a minimum of $200 million in local deposits based on data from the Federal Deposit Insurance Corp. The banks supplied information on local employees and branches, statistics that don’t factor into rankings.
Only four banks reported a decline in deposits, compared with nine in 2019 and 16 in 2018. A year ago, the biggest drop was 8.6% Santa Ana-based Banc of California Inc.
Banc of California’s deposits continued to fall, dropping 2.6% to $3.6 billion. Ever since Jared Wolff became CEO in May 2019, the bank has embarked on a strategy to reduce depositors wanting higher yield to focus on business customers who don’t expect to earn interest on their accounts. During his tenure, non-interest bearing accounts have gone from 12% of all deposits to 26% as of Dec. 31.
“As a relationship focused business bank, we’ve been emphasizing relationship deposits as opposed to those seeking the highest rates,” Wolff told the Business Journal. “We did really well last year. As a public company, our shareholders are pretty happy.”
Shares of Banc of California have tripled to $19.58 and a $983 million market cap since their 52-week low of $6.44 last March (see separate article, page 30).
Perhaps the most significant trend in banking is growing deposits amid falling OC employee counts: worker counts here dropped 2% to about 16,100.
The number of branches continued a steady decline, and now total 580 locations. In 2013, the 40 largest banks in OC reported 719 local branches.
Bankers also note these remaining branches are often smaller than in years’ past.
Stephen Gordon, who built Opus Bank to 50 branches, is starting a new bank called Genesis that will have one or two offices because customers know how to bank online (see separate story, page 1).
One exception to that trend was BofA, which added three branches.
“We’ve been looking at areas where we can service our clients effectively,” Thomas said. “Our strategy is simple—advanced centers that are designated brick and mortars that still allow for consultative needs.”
Notable changes on the list include:
• The fastest-growing bank in the top five was Irvine-based Pacific Premier Bank, which grew deposits 129% to $8.3 billion. Last June, it completed the acquisition of cross-town rival Opus Bank, which reported about $3.5 billion in OC deposits in 2019.
Pacific Premier, now the largest bank headquartered in Orange County, jumped from No. 9 to No. 4 on this year’s list.
• The biggest increase overall was Bank of Southern California, which climbed 2,890% to $254 million. The San Diego-based bank last year acquired CalWest Bancorp; its OC employee count rose sixfold to 32.
• An astounding 33 banks reported deposit growth that topped 10%.
Among the notable increases: Poppy Bank, which has a Costa Mesa office, up 149% to $209.4 million; Umpqua Bank, which has a Newport Beach office, up 113% to $224 million. Irvine-based Sunwest Bank, up 57% to $1.19 billion; Irvine-based Nano Banc, up 55% to $949.7 million; and Irvine-based Commercial Bank of California, up 52% to $905.9 million.