This calendar year saw a lot of activity in Orange County’s financial services sector that stands to spill over into 2001.
Companies have taken advantage of the Financial Services Modernization Act and gone to town with mergers and acquisitions. The banking industry saw some of its giants get bigger, with Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. all making acquisitions. Second-tier players Comerica Inc. and Imperial Bank also got together. Meanwhile, more independent banks popped up across the nation.
In Orange County, we saw Pacific Mercantile Bank, South County Bank and PriVest Bank debut in 2000. We should see more next year: There are a half-dozen new banks organizing in OC.
Deposits in the county grew 5% in 2000 to nearly $20 billion, and institutions here are expecting similar growth for 2001.
Most of the large, national banks,Bank of America, Wells Fargo, U.S. Bank,still are digesting acquisitions and could stay off the prowl for a while. U.S. Bank finished its acquisition of Irvine-based Western Bancorp last year. It also brought its securities operations to Newport Beach and it is looking to expand its presence on the West Coast. We should see some mid-tier institutions and small banks looking to acquire or merge with other banks, much like Ontario-based Citizens National Bank’s acquisition of Orange National Bank last year.
Many analysts believe bank stocks could keep heading north, especially considering a possible move to cut interest rates by the Federal Reserve. But many banks could miss earnings expectations next year because of problem loans. With the good economy, banks have been more aggressive,some too aggressive. Two banks,Keystone National Bank of Keystone, W. Va., and Woodland Hills-based Pacific Thrift and Loan,failed in the past two years, putting regulators on guard.
Many community banks have gained momentum with the strong economy and filled their portfolios with real estate and construction loans. Federal regulators worry that if the economy takes a downturn and real estate values drop, those assets could turn to stone.
Banks stand to continue venturing online in the hopes of keeping customers. Web-only banks may have a tough time as brick-and-mortar banks step up their online offerings.
Venture capital continues to flow in OC, though more selectively amid a rash of dot-com failures and a tough market for technology stocks. Still, the area has seen a handful of new players enter the market in the past year. n
