The largest Orange County-based banks and thrifts saw a 7% gain in deposits in the third quarter, with overall lending and employment flat.
Deposits at the 11 biggest banks and thrifts grew to $17.1 billion in the third quarter, according to market tracker Carpenter & Co. Deposits were up 6% in the second quarter.
Assets at the top OC financial institutions,four thrifts and seven commercial banks,grew less than 1% in the period to $25.1 billion. Assets include cash, loans, real estate and securities held by a bank or thrift.
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. South Coast counted about $150 million in assets, in the third quarter.
Banks and thrifts are boosting rates on certificates of deposit in their battle to lure accounts. Banks use deposits to fuel lending.
The Federal Reserve’s upping of short-term interest rates 12 times since June 2004 has provided ammunition for the banks and thrifts to raise rates on CDs and loans.
“With our strong loan growth, we need to grow our deposits,” said Jon Shigematsu, chief financial officer of Fullerton Community Bank, which is the fifth-biggest bank or thrift by assets.
Fullerton Community offers an 11-month CD at 4.25%, with a minimum $10,000 investment. The average one-year CD is 4%, according to a recent check at Bankrate.com.
Fullerton Community saw its deposits grow 11% to $423 million during the past quarter. Total loans outstanding grew 3.2% to $462 million during the period.
The thrift said it’s seeing strong growth in the apartment and small business lending areas.
Ash Patel, president and chief operating officer of Anaheim-based Premier Commercial Bank, said the bank has developed a healthy pipeline of construction and hotel loans since its inception in 2001.
Growth has been driven in part from its work with hotels and other businesses around the Disneyland Resort, with about 25% coming from the hospitality sector, Patel said.
Premier Commercial’s loans grew 28% to $171.3 million in the third quarter,the fastest growth among the biggest banks here.
Despite interest rate increases, Patel expects the bank to post double-digit asset growth during the next few years, “even though the pace might slow” in comparison to previous years, he said.
The bank’s assets grew to $241 million in the third quarter, up about 9% from the prior quarter. Premier Commercial’s deposits also grew about 9% to $222 million in the period.
Total loans held by the biggest OC banks were up less than 1% to $22.1 billion in the quarter.
Bankers are watching rising short-term interest rates.
“Everyone is facing a yield curve that is flat and tightening,” said Fullerton Community’s Shigematsu.
A flat yield curve happens when short-term interest rates align with long-term ones. That can cause profits to be squeezed at banks because they borrow money based on short-term rates and loan money based on long-term ones.
Loans and assets at local banks should rise in the fourth quarter, according to Edward J. Carpenter, chief executive of Carpenter & Co. in Irvine.
Carpenter forecasts a 3% to 5% increase in loans and assets, with consumer deposits posting “modest growth” and business deposits growing faster.
Employment was virtually flat at 3,445 workers at the biggest banks and thrifts here.
The biggest shift in jobs came at Irvine-based Commercial Capital Bancorp, which saw a 7% increase to 430 workers, versus the second quarter. Commercial Capital picked up 24 employees in late July when it recruited a unit out of Comerica Inc.’s El Segundo office.
Earlier this month, Comerica won a court order preventing the 24 former employees hired by Commercial Capital from using, destroying or disclosing trade secrets in their current jobs.
Few Job Declines
Slight job declines were reported at Newport Beach-based Downey Savings & Loan, Buena Park-based Los Angeles National Bank and Orange Community Bank in Orange.
Lower assets were reported at two of the largest locally based banks and thrifts: Downey and Tustin-based Sunwest Bank.
Sunwest’s assets have been uneven in recent quarters. Assets fell 2% to $290 million in the third quarter after rising 7.3% in the second quarter.
Downey, a big mortgage lender, saw its assets fall less than 1% to $16.6 billion in the third quarter.
Profits and interest income at local banks and thrifts moved in different directions in the third quarter. Interest income rose 9% to $361 million in the period while profits fell 3% to $97 million for the top 11 banks and thrifts.
The decline in profit could be an indicator of how 2006 plays out for the banking sector: a tougher profit environment amid rising rates.
