Banks headquartered locally reported a whopping 62% increase in assets to $64 billion, helped by a mega acquisition.
This year’s growth compares to a 1.6% decrease in 2023 and a 10% increase in 2022.
Santa Ana-based Banc of California Inc. (NYSE: BANC) accounted for more than half of the total assets, boosted by its acquisition last December of the troubled PacWest Bancorp, which had about $25 billion in assets at that time.
As a result, Banc of California’s assets climbed 276% to $35.2 billion and jumped up one spot to No. 1.
While the company has shifted its headquarters to Los Angeles, Chief Executive Jared Wolff said the bank is keeping its South Coast Metro office in Santa Ana, which he considers a dual headquarters. The bank certainly hasn’t left Orange County as its headcount rose 55% to 630.
“This is a transformational year for our company, and we will remain focused on optimizing our business to drive long-term sustainable growth and profitability,” Wolff said in a statement in July after releasing positive second quarter results.
Since the Federal Reserve lowered interest rates in September, Banc of California has started to reduce deposit pricing and monitor market conditions and customer behavior.
“We believe our balance sheet is well-positioned for a declining rate environment, with our balance sheet being more liability-sensitive and set to reprice or mature over the next year,” Wolff said in an Oct. 22 third-quarter earnings call.
Since the PacWest deal closed last December, shares have climbed about 35% to $15.29 each and a $2.6 billion market cap, becoming the most valuable bank in Orange County.
Investment Loan Drop for PPBI
Irvine-based Pacific Premier Bank, which slipped to the second most valuable bank with a $2.4 billion market cap, also fell to No. 2 in assets, which declined 12% to $18.3 billion.
Its cash, investment securities and loans held for investments accounted for most of the drop. Furthermore, its noninterest-bearing checking accounts on its liabilities ledger dropped by about $1.3 billion to $4.6 billion.
“We saw clients use excess deposits to pay down and pay off loans coupled with seasonal factors associated with tax payments and distributions, as total deposits declined from the prior quarter,” Chairman, CEO and President Steven Gardner said in a second-quarter release in July.
“Overall, credit performance was consistent with our expectations as our borrowers are on solid financial footing and borrower cash flows generally do not appear to have deteriorated in any material way.”
Pacific Premier reduced its OC headcount by 4.4% to 461.
Lower Middle Market Growth
Irvine’s Commercial Bank of California (CBC) continued its positive growth trajectory, increasing 10% to $2.5 billion; a year ago, assets increased 16%. Its headcount climbed 70.3% to 201.
Ash Patel, chairman and CEO of CBC, said the bank experienced momentum within the hospitality and healthcare industries.
“We helped this industry greatly during COVID with PPP loans, and this growth in deposits was driven by their reciprocity and gratitude,” Patel told the Business Journal.
He added that lower middle market industries in Orange County are performing well with lowered interest rates.
Manufacturing is also making a comeback amid companies buying more machinery and other equipment, he said.
“We’re seeing green shoots of companies coming back into California,” Patel said.
The bank’s parent company, CBC Bancorp, last week announced that the Federal Deposit Insurance Corp. (FDIC) approved its proposed acquisition of Oakland-based Bay Community Group.
The transaction, first announced in May, will result in approximately $3.7 billion in combined assets.
Another bank reporting double digit growth was No. 3 Sunwest Bank in Irvine, which increased 21% to $3.4 billion. Last year, its assets jumped 18%.
Sunwest caters to entrepreneurs, specializing in small to medium-sized businesses, privately held companies and family offices.
While the bank moved its headquarters to Utah in 2022 for what executives described as technical reasons, most of its operations remain here as it reported 117 employees, a 4.9% drop from a year ago.
