Banks headquartered in Orange County reported their assets fell 1.6% to $39.7 billion as they were buffered by the industry turmoil last March when some regional banks failed.
This year’s decline compares to increases in the three prior years ranging from 3% to 31%.
The rankings are based on assets for the 12-month period ended June 30.
The declines were widespread as eight of the 13 on the list saw their assets fall.
Their net income for the first six months this year also fell, 17%, to $218.7 million from the same period a year earlier. They also reduced their workforce 2% to 1,496.
Thirteen banks made the list, the same as last year’s. A decade ago, 26 banks were on the list but with far fewer assets of $10.6 billion.
The biggest decline, by dollar volume, was at No. 1 Pacific Premier Bank, where assets fell $1.25 billion, or 5.7%, to $20.7 billion. A significant reason was that loans held for investment fell $1.4 billion to $13.6 billion on its balance sheet.
“The decrease from June 30, 2022, was primarily driven by lower loan fundings due to our disciplined approached around credit risk management and lower loan demand as well as loan sales,” the company said in its second-quarter release in July.
BANC and CBC
No. 2 Santa Ana’s Banc of California Inc. (NYSE: BANC) also reported a 1.5% decline in assets to $9.36 billion. Lending is down because of higher interest rates, CEO Jared Wolff said.
“We’re not choosing” to reduce lending, Wolff said. “The market is making that decision. The Fed’s rate raises have had the intended affect.”
Banc of California is in the process of acquiring PacWest BanCorp., a transaction that is expected to close Nov. 30.
The two largest banks also accounted for 17 branches, more than half of the total in Orange County. The number of OC branches on the list has steadily fallen to 34 this year from 56 in 2011. Most of the other banks have only one branch.
No. 4 Commercial Bank of California continued its upward trajectory, climbing 16% to $2.25 billion. A year ago, assets jumped 15%.
The increase was because privately held CBC doesn’t face the same pressure for profits as publicly traded banks that took bigger risks, Chairman and Chief Executive Ash Patel said.
“We’re a privately held bank so we’re not susceptible to the whims of the market,” Patel said.
“We were able to create a narrative around the safety of CBC. We lost a little in assets at the beginning (of the bank turmoil in March), but at the end we gained more than we lost.”
CBC’s assets have steadily climbed from $200 million in 2013 when Patel took the CEO position.
Economy Contracting?
No. 5 CommerceWest Bank, owned by parent CW Bancorp (OTC: CWBK), reported assets fell 2.7% to $1.18 billion.
“Business loan demand continues to be soft and CEOs are cautious about the economy going forward; however credit quality has remained strong,” CEO Ivo Tjan told the Business Journal.
He said consumer demand seems to be slowing as well for home loans and car loans.
“The trend is probably somewhat similar on a national level as we believe the economy has started to contract,” he said.
For the second straight year, the fastest grower was Newport Beach’s Genesis Bank, which was begun in 2021 by Stephen Gordon, who successfully started and sold two prior banks.
Its assets jumped 54% to $185.4 million; Last year, they more than doubled.
“I’m glad we’re a new bank,” Gordon said. “I don’t have all that legacy stuff from 5 to 10 years ago. It’s a good position to be in.”
Irvine-based Nano Banc has slowed the drain on its assets, which fell 7.9% to $945 million; a year ago, its assets fell 20%.
The online bank, which began in 2018, came under criticism for growing too fast from regulators, who forced the bank to make changes to its management and board of directors.
The new management at Nano Banc is expressing confidence in its future by boosting employment by 45% to 68. A year ago, it was the biggest decline in headcount, falling 22%.
The list of banks headquartered in Orange County has notably changed in the past couple of years.
Several well-known banks have been removed from the Business Journal’s annual lists in recent years, either through acquisitions like Pacific Mercantile and Opus Bank, or moves out of state like First Foundation.
