Bankers and financial advisers expect a general pick-up in 2012.
But their optimism is tempered with caution.
“In general, companies have been sitting on their hands, although they want to do things; that has created a dynamic of everybody being slow to react,” said Bryant Riley, chairman of the Los Angeles-based investment bank B. Riley & Co., which has an office in Newport Beach. “That’s going to change. At some point, banks are going to have to originate loans. We’re going to see much more transactions and activity in the next year.”
Craig Hirson, Bank of America’s business banking executive for Orange County, has a similar view.
“In 2011, we’ve definitely made it a focus to originate more loans than the prior year,” Hirson said. “In 2012, we expect the loan origination to continue at a similar pace— maybe a little bit more.”
The confidence is driven by other signs of growth.
“More clients are willing to take the step to buy the next piece of equipment or finally deciding to buy a real estate piece that they’ve been eyeing,” Hirson said. “We saw that in 2011, and we’ll see it in 2012. Clients have been gun shy about pulling the trigger on using that credit due to uncertainty in the marketplace.”
City National Bank Executive Vice President Kevin Dunigan, who is based in Irvine, said he expects to see more banks consolidating in the coming year.
“The merger environment is heating up a bit,” Dunigan said. “There may be some of the smaller banks that decide they’d be better off merging.”
The Los Angeles-based bank has com-pleted four Federal Deposit Insurance Corp.-assisted transactions since the recession.
“Those seem to have dried up for now,” Dunigan said. “Now it’s more of the normal mergers and acquisitions.”
Next year’s presidential election could inject some additional uncertainty in the economy, Hirson suggested.
“People are waiting a little bit to see what happens there,” he said.
“Most business folks are looking at the election,” Dunigan said. “Depending on the sector, there are some that will be a bit more cautious. Some sectors are still working through the hangover of the recession—most notably real estate—but other sectors are starting to rebound.”
Not that anybody is clicking their heels just yet.
“Optimism is something you don’t hear much out there,” Hirson said. “But you don’t hear a lot of horrible stories any more either.”
PERSON TO WATCH: STEPHEN GORDON
The Business Journal is keeping Stephen Gordon on our watch list for a second year.
Gordon spent 2011 boosting Opus Bank’s assets by $1.8 billion through acquiring two banks, to more than $2.5 billion.
He has consistently said that the banking industry should “start leading the economic turnaround instead of sitting on the cash.”
The recent acquisitions put Opus Bank in position to lead locally.
The bank became the largest Orange County-based bank by asset size this year and now runs 37 banking offices throughout Southern California and the Seattle region.
New branches are coming, with Irvine, Laguna Niguel and West Los Angeles all expected to see openings in coming months, according to Gordon.
“We have 12 more locations signed,” Gordon said. “We’re starting a Northern California expansion.”
Opus Bank has “a lot of cash and a lot of liquidity and a lot of money to be lent out,” he said.
—Jane Yu
COMPANY TO WATCH: PACIFIC MERCANTILE BANCORP
Costa Mesa-based Pacific Mercantile Bancorp heads into 2012 with a busy calendar.
A couple of stock sales in the first quarter are expected to bring $27.3 million. The bank plans to follow up by hiring a new chief executive in place of Ray Dellerba, who will stay as CEO of the bank’s parent company.
The stock sales call for $11.8 million of preferred stock and $15.5 million in common stock to go to the bank’s major investors: SBAV LP, which is affiliated with Clinton Group Inc. in New York, and two funds from Irvine-based financial advisory Carpenter & Co.
The Carpenter funds will be the bank’s largest shareholder when the sales wrap up, with a stake of about 29%.
The Business Journal also is keeping close watch on possible moves from Carpenter & Co., which has been investing in banks here and in Los Angeles, including Irvine-based Plaza Bank, Manhattan Bancorp in El Segundo and Pasadena-based Professional Business Bank. Professional Business Bank and Manhattan recently combined, creating a $407 million bank, a significant portion of which is held by Carpenter.
Pacific Mercantile saw an overall turnaround this year as it reported a profit each quarter. The bank was in the red in 2010.
The improvement comes in large part from the mortgage division, which is expected to continue the drive.
—Jane Yu
