Orange County’s homegrown commercial banks recorded another explosive year of asset growth with the top local bank becoming the first in years to surpass the $1 billion mark.
Together, the 19 banks on the Business Journal’s list posted a 21% jump in assets to $3.7 billion for the 12 months ended June 30.
Last year’s list, which also included 19 banks, showed 28% growth.
The list ranks banks based here by assets, which include cash, loans, real estate and securities.
Information on assets comes from the Federal Deposit Insurance Corp.
The number of people working at the homegrown banks grew 21% to 726 in the past 12 months. The banks on the list now have a combined 32 branches, up by four from last year.
A big story during the past year has been the battle among local banks for deposits, which are used to make loans to businesses and individual borrowers.
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Local banks have been boosting rates on certificates of deposits to lure customers.
The Federal Reserve’s upping of short-term interest rates since mid-2004 to 5.25% has provided fuel for higher CD rates.
Still, rising interest rates are a double-edge sword for banks. The steady rising of the past two years has tamed inflation but could threaten growth as the economy cools from its recent peak.
Demand for loans could decline in a slower economy, while late payments on existing loans may increase.
The county’s economy, which is stronger than in many parts of the state and the nation, should help banks weather any potential downturn, executives said.
No. 1 Pacific Mercantile Bank of Costa Mesa dominated the list with 9% asset growth to $992 million as of June 30.
Pacific Mercantile has more in assets than the next three banks on the list combined.
In October, Pacific Mercantile became the first homegrown bank in recent years to surpass the $1 billion asset mark.
“We are a small business lender and we have not seen a slowdown yet,” said Raymond Dellerba, chief executive of Pacific Mercantile. “The economy is still very positive to date.”
The last local bank to surpass the $1 billion asset mark was bought out.
Five years ago, Eldorado Bank hit the $1 billion-plus asset mark and was acquired by California Bank & Trust, a unit of Utah’s Zions Bancorporation.
Pacific Mercantile has had bumps along the way.
It got its start as an Internet bank in the late 1990s during the technology boom. Then came the tech bust and the larger recession of the early 2000s.
More recently, in 2005 Pacific Mercantile cut close to 60 workers as part of the shuttering of its wholesale mortgage banking unit.
The problem: growing costs amid rising interest rates.
These days, Pacific Mercantile counts 105 OC workers, up 5% from a year earlier. The bank has four local branches in Costa Mesa, La Habra, Newport Beach and San Juan Capistrano.
Pacific Mercantile also is one of a handful of publicly traded banks on the list with a recent market value of nearly $200 million.
No. 2 Sunwest Bank of Tustin held the same spot from last year with $295 million in assets, unchanged from a year earlier.
Sunwest has had trouble finding its legs.
The bank has seen several changes in its executive ranks in recent years and saw its assets slip from 2004’s $300 million, though it seems to have stemmed the slide.
Sunwest recently lost chief financial officer John Michel, who was appointed in early 2005.
And Sunwest may soon lose the No. 2 spot on the list.
Costa Mesa’s Pacific Premier Bank recently received approval from the state’s Department of Financial Institutions to convert from a savings and loan to a state chartered commercial bank, which would earn it a spot on our list of OC-based banks.
The conversion is due in coming weeks, pending Federal Reserve Board approval.
Pacific Premier counts assets of $712 million.
And Sunwest may not be safe in the No. 3 spot, either.
This year’s No. 3, Anaheim-based Premier Commercial Bank, is nipping at the heels of Sunwest.
Premier Commercial, which has one branch at its headquarters near Angel Stadium of Anaheim, saw a 28% rise in assets to $284 million as of June 30.
In July, Premier Commercial completed a secondary offering with the sale of nearly 800,000 shares of its stock for $17.6 million. The bank plans to use part of the money to start doing business in the Phoenix suburb of Mesa before the end of the year.
OC is saturated with new banks, prompting Premier Commercial to look to Arizona, said Ash Patel, president and chief operating officer.
No. 4 Uniti Bank of Buena Park, which targets North County’s large Korean population, saw a 36% rise to $228 million in assets.
And No. 5 Independence Bank of Newport Beach saw the biggest jump on the list, going from No. 16 a year ago with a 385% rise to $222 million in assets.
Independence bank recently converted from an industrial loan company to a bank to offer more services. (Industrial loan companies can make loans and process credit card transactions but can’t offer all of the same services as banks.)
“We want the flexibility to expand,” said Chuck Thomas, chief executive of Independence Bank.
No. 15 Tustin Community Bank also recently converted to a commercial bank from an industrial loan company. The bank saw a 10% rise to $52 million in assets.
Independence Bank’s change, Thomas said, had little to do with a moratorium imposed on acquisitions of industrial loan companies by the FDIC.
Regulators imposed a six-month hold on the acquisition of industrial loan companies amid Wal-Mart Stores Inc.’s bid to buy one in order to offer bank services.
A few years ago, Wal-Mart unsuccessfully tried to buy Franklin Industrial Bank of Orange for $2.4 million.
At the time, unions and bankers lobbied the California Legislature to pass a law barring non-financial companies from owning industrial banks.
Two banks from last year fell off the list.
Huntington Beach’s Pacific Liberty Bank, last year’s No. 10, was acquired by Rancho Santa Fe’s First Community Bancorp last year.
And South Coast Commercial Bank of Irvine, last year’s No. 11, was bought by South Korea’s Woori Finance Holdings Co., which runs Woori America Bank.
The departures cleared the way for two newcomers.
Orange-based First Security Thrift Co. came on at No. 14 with $134 million in assets. First Security is an industrial bank owned by Santa Ana’s First American Corp.
Westminster’s Saigon National Bank debuted at No. 19 with $18 million in assets.
The bank, focused on the Vietnamese-American population of Little Saigon, opened a year ago. Its one branch is in the Brookhurst Town Center near Brookhurst Street and McFadden Avenue.
Little Saigon, whose main artery includes Brookhurst, runs through parts of Westminster, Garden Grove and Santa Ana. The area is home to more than 300,000 people and is the largest Vietnamese ethnic community outside Vietnam.
The county has seen a rash of banks start in the past few years, many of them focused on ethnic niches.
Another bank recently formed to serve Vietnamese-Americans is No. 18 Westminster-based First Vietnamese American Bank, which saw a 126% rise to $36 million in assets.
First Vietnamese moved up a spot from last year.
US Metro, a Korean-American bank, is in the works for Garden Grove. It stands to join Uniti Bank and others here focused on Korean-Americans.
The ethnic wave follows a rush of mainstream business banks that started earlier in the decade.
They include No. 6 Costa Mesa-based Commercial Bank of California, which saw a 39% rise to $216 million in assets.
The bank was started in 2003 with some big investors, including William Lyon, chief executive of Newport Beach-based William Lyon Homes Inc., and Emulex Corp.’s Paul Folino.
The relatively crowded field of smaller banks,which all bill themselves as more attentive than the national banks operating here,has prompted some to look beyond the county.
Besides Premier Commercial’s move into Arizona, No. 17 MetroPacific Bank of Irvine is considering expanding to the Inland Empire.
MetroPacific is considering a branch in Riverside County’s Coachella Valley, according to Rob Hildt, chief executive of the bank, which counts $42 million in assets, up 105% from a year earlier.
