Orange County’s homegrown commercial banks recorded another explosive year of asset growth.
Together, the 19 banks on the Business Journal’s list posted a 32% jump in assets to $3.2 billion for the 12 months ended June 30. Last year’s list, which included 14 banks, showed a 26% growth in assets for the year ended June 30, 2004.
The Business Journal list ranks all banks with OC headquarters by assets. The data for assets, which include cash, loans, real estate and securities held by the bank, are taken from Federal Deposit Insurance Corp. filings.
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 individuals.
|
|
Local banks have been boosting rates on certificates of deposits in order to attract customers. The Federal Reserve’s upping of short-term interest rates in 12 quarter-point increments to 4% during the past year has provided fuel for higher CD rates.
Meanwhile, banks are watching the economy closely. The rise in interest rates could eventually slow the economic expansion of the past few years. If the economy slows, bank lending demand could decline while delinquencies among existing loans increase.
But most bank executives say that OC’s vibrant economy should help banks weather any potential downturn.
“I see very little change or impact on the bank in the first three quarters of 2006,” said Michael Hahn, chief operating officer of Pacific Coast National Bank. “We should see slowing beginning in the third quarter (of 2006) into 2007. Hopefully, interest rate increases will be held to a minimum in 2006.” (See related story, page 48).
Just one bank on the list saw a decline in assets in the past year. Two banks had a single-digit gain, 10 had double-digit gains and two had triple-digit gains.
Five banks opened during the past year,another big story for OC’s banking sector during the past 12 months.
A wave of consolidation during the past decade knocked the number of OC-based banks from more than 60 in the early 1990s to just 14 for last year’s ranking.
But during the past year the OC banking sector has seen several banks open: No. 16 Independence Bank in Newport Beach, No. 17 Pacific Coast National Bank in San Clemente, No. 18 MetroPacific Bank in Irvine and No. 19 First Vietnamese American Bank in Westminster.
No. 14 Commerce National Bank in Fullerton, which opened in late 2003, debuted this year because asset data wasn’t available in time for last year’s list.
Topping the list again was Pacific Mercantile Bank. The Costa Mesa-based bank has consistently posted strong growth since opening more than six years ago as an Internet-based bank.
Pacific Mercantile’s assets grew 16% to $913 million during the past year. Deposits rose 9% to $615 million in the period.
But Pacific Mercantile has felt some effects of a slowing housing market. The bank cut close to 60 workers as part of the shuttering of its wholesale mortgage-banking unit at the end of September.
The problem: growing costs amid rising interest rates. The bank has decided to focus on building its commercial banking business.
Pacific Mercantile has expanded its retail branch network in Southern California, which includes eight branches with four in OC.
Raymond Dellerba, president and chief executive of Pacific Mercantile, said his bank plans to open another branch in the San Fernando Valley soon. The bank has plans to open two branches a year.
“Once we open that office (in the Valley), we can allow our branches to mature and grow and gain in value,” he said.
The only bank to shrink in assets was No. 2 Tustin-based Sunwest Bank.
Sunwest’s assets fell 3% to $295.7 million for the period ended June 30. Sunwest has posted relatively flat growth during the past few years.
The bank has seen some changes in its executive ranks. Tara Balfour, former president of Bank of America Corp.’s OC operation and head of its statewide commercial banking unit, this summer was named executive managing director in charge of running Sunwest’s operations. Balfour joined Sunwest as a board member in May.
Sunwest’s interim chief executive, Irving Beimler, is a senior executive with Washington, D.C.-based Hovde Financial Inc., which owns about 70% of Sunwest along with other partners. He joined Sunwest’s board in May 2004.
Beimler had been flying back and forth between OC and Washington weekly to run the bank while also taking care of his Hovde duties.
Sunwest also named John Michel chief financial officer in February.
No. 3 Premier Commercial Bank of Anaheim climbed two spots on the list with a 74% increase in assets to $222 million for the 12 months ended June 30.
Premier Commercial is following a familiar pattern among OC banks founded in the past five years: rapid asset growth. The bank, which was founded in 2001, busted through the $100 million asset mark in 2003, and has more than doubled in size since then.
Growth has been driven in part from its work with hotels and other businesses around the Disneyland Resort.
“Most of our business is driven by small-to-medium-sized businesses, with about 25% coming from the specialty hospitality niche,” said Ash Patel, the bank’s chief operating officer.
“Over the next two to three years we predict fairly robust growth,” Patel said.
Even with rising interest rates, Patel projects the bank will post double-digit asset growth during the next few years, “even though the pace might slowdown” in comparison to previous years, he said.
“It’ll be extremely challenging, but we’ll review on a case by case situation to try and match whatever our competitors have to offer,” he said.
The fastest-growing banks included Commerce National Bank of Fullerton, which recorded a 198% asset gain to $92 million, and No. 8 Orange County Business Bank of Newport Beach, which slipped four spots from last year’s ranking despite growing assets 121% to $156.9 million.
The county has seen several banks targeting specific ethnic groups open during the past few years. Uniti Bank of Buena Park, which is focused on the Korean American population, jumped six spots to No. 5 on a 63% rise in assets to $167.9 million.
Meanwhile, First Vietnamese recently has been joined by Saigon National Bank in targeting the county’s Vietnamese Americans. Saigon National still is in the process of raising startup funds and could appear on next year’s list.
