The 10 biggest Orange County-based banks and thrifts saw deposits and assets grow in the fourth quarter.
Other than a sharp decline at OC’s biggest, Newport Beach-based Downey Financial Corp., the group also posted a gain in profits.
Overall deposits grew 2% to $17.2 billion, compared to the third quarter, according to the Business Journal’s quarterly analysis of top banks. The data was compiled by Irvine-based Carpenter & Co.
Assets were up 4% to $25.9 billion while profits fell 19% to $70.3 million.
But factoring out Downey’s 29% decline in profits to $43.8 million from the third quarter, the remaining banks recorded a 5% increase.
Downey’s thrift unit is a big lender to homebuyers. It’s been impacted by rising interest rates.
“In a rising interest rate environment, mortgage originations fall, and profits fall, too,” said Ed Carpenter, chief executive of Carpenter & Co.
The other banks on the list mainly have commercial lending operations. They aren’t affected as quickly as mortgage lenders by rising interest rates. Commercial loans typically are variable and reprice as interest rates rise and fall, Carpenter said.
The Business Journal began tracking results at the largest banks during the first quarter last year. It’s been a healthy period for the banks, despite the rising interest rate environment.
Assets, which include cash, loans, real estate and securities, are up 3% at the 10 banks since March 2005. Deposits have jumped faster, up 15% as investors parked money in safer certificates of deposit or other short-term investments offered by banks amid relatively flat stock markets.
Banks are raising the rates they pay customers to attract deposits. They’re also using more aggressive loan terms to attract consumers and corporate customers in the competitive market.
Credit quality is a factor to watch. Some observers see a threat to credit performance from unusually strong levels during the economic rebound of the past few years. Higher rates coupled with a possible economic slowdown could raise the amount of delinquent loans held by local banks.
The fourth quarter showed no sign of loan deterioration. OC banks posted a slight decline in an already low level of charge offs, or loans considered to have gone bad. Overall, banks saw just 0.14% of their loans as charge offs.
Employment at the top banks rose slightly to 3,417 in the fourth quarter, up 21 workers from the third quarter. The banks have cut a total of 37 jobs since the first quarter last year.
Two banks reported job cuts during the fourth quarter. Downey cut 19 workers while Costa Mesa-based thrift Pacific Premier Bancorp Inc. posted two job losses in the quarter.
A notable hiring was at Tustin-based Sunwest Bank.
Sunwest, which has struggled to keep pace with other local banks on the deposit front during the past few years, hired Glenn Gray as chief executive during the fourth quarter.
Gray previously was chief operating officer at Scottsdale-based Finova Group Inc., where he worked selling off assets at the financial services company.
He replaced interim chief Irving Beimler, an executive with the bank’s majority owner, Washington, D.C.-based Hovde Financial Inc. Beimler had run things since August 2004.
Sunwest saw assets rise 2% and deposits gain 3% during the fourth quarter.
Outstanding loans at the top banks in the fourth quarter rose 4% to $22.6 billion, versus the third quarter. Total interest income rose 5% to $330 million.
Two banks tracked by the Business Journal during the past year have fallen off the list.
Huntington Beach-based Pacific Liberty Bank, which was the 11th biggest in the third quarter, was bought for $42 million by First Community Bancorp of Rancho Santa Fe in the fourth quarter.
Irvine’s South Coast Bancorp, which was the 12th biggest bank in the second quarter, fell off the ranking after being acquired by Camarillo-based First California Bank last year.
Downey topped the list of banks and thrifts with $17 billion in assets. Others were: Commercial Capital Bank, $5.4 billion; Pacific Mercantile Bancorp, $968 million; Pacific Premier, $699 million; Fullerton Community Bank, $612 million; Sunwest Bank, $297 million; Premier Commercial Bank, $278 million; Los Angeles National Bank, $206 million; South County Bank, $172 million; and Orange Community Bank, $166 million.
