It’s become a broken record.
Deposits at Orange County’s 25 largest banks grew for the fourth year in a row, jumping 20% to $36 billion for the 12 months through June 30, versus $30 billion a year earlier, according to this week’s Business Journal list.
U.S. banks posted 6% deposit growth during the same period, according to the Federal Deposit Insurance Corp. Last year’s crop of OC banks reported 16% growth in deposits.
Deposit data was obtained from the Federal Deposit Insurance Corp. The list ranks the top 25 commercial banks, either based here or operating in OC, by total deposits held in the county.
The growth in deposits has been spurred by several factors, according to Ed Carpenter, chief executive of Irvine-based banking consultancy Carpenter & Co.
Carpenter said businesses and investors flock to the safety of insured bank accounts during “periods of historically low interest rates when uninsured money market accounts do not offer sufficiently higher yields to be attractive; times of catastrophic events such as the flow of funds to banks after Sept. 11; time of war; significant immigration of wealthy individuals with deposits, in OC’s case from Asia, India and the Middle East; and significant devaluation of the dollar relative to foreign currencies which brings investment dollars, originally as deposits, looking for relatively low-priced bargain long-term investments.
“In California’s case this is the first time since World War II that all of these factors are in play at one time,” Carpenter said.
The two biggest banks in California,No. 1 Bank of America Corp. and No. 2 Wells Fargo & Co.,continue to dominate the list.
Together, they accounted for almost two-thirds of all OC deposits held by the list’s 25 banks. And almost half of the overall deposit growth reported by the banks came from Charlotte, N.C.-based Bank of America and San Francisco-based Wells Fargo.
BofA maintained its hold on the top spot, with a 16% climb in OC deposits to $11.8 billion. The growth came as the bank boosted its local branches by five to 89.
The bank is looking for more growth this year.
“We expect double-digit growth in our business bank primarily achieved through customer acquisition,” said Kim Burdick, president of BofA’s OC division.
Wells Fargo saw its OC deposits rise 18% to $7.4 billion in the 12-month period.
This year Wells Fargo is set to “add new banking stores, relocate or expand smaller locations into larger ones, increase the number of bankers located in our stores and substantially increase the numbers of licensed bankers inside our banking stores,” said Kim Young, president of Wells Fargo’s OC division. Wells Fargo increased its number of branches by two to 83 during the year.
Perhaps the biggest story on this year’s list was No. 3 Fremont Investment & Loan, a unit of Santa Monica-based Fremont General Corp.
Fremont provides deposit accounts along with commercial and residential real estate loans nationwide through nine commercial and five residential regional offices. A lot of its lending is in the subprime, or less-than-perfect credit, category. Subprime lending has seen blockbuster growth in the past few years, with the likes of Irvine-based New Century Financial Corp. and Orange-based Ameriquest Mortgage Co. among the big winners.
Fremont moved past No. 4 Union Bank of California in the rankings on a doubling of deposits to $3.4 billion in the period.
Union Bank fell a spot even as it grew deposits 16% to $3.2 billion. Union Bank is a unit of Japan’s Bank of Tokyo-Mitsubishi Ltd.
The bank bought former No. 22 CNA Trust Corp. in Costa Mesa last year.
The fastest growing bank on this week’s list: No. 22 Pacific Western Bank, a unit of Rancho Santa Fe-based First Community Bancorp.
Pacific Western, which debuts on this year’s list, recorded a 335% increase in deposits to $199 million, added three OC branches for a total of four and boosted local employment 63% to 67.
The gains also are a product of parent First Community buying former No. 23 Harbor National Bank in Newport Beach.
Only two banks on the list recorded a decline in deposits in the period.
No. 8 U.S. Bank, a unit of Minneapolis-based U.S. Bancorp, saw deposits drop 12% to $866 million, despite adding nine branches for a total of 22.
“There’s a lot of movement of assets off balance sheet,” said Todd Hollander, executive vice president of U.S. Bank’s OC operation. “Companies are moving items into things like money market funds that show up as assets, but not deposits.”
The trend likely will continue, consultant Carpenter said.
“We are just beginning to see in this first quarter of 2005 measurable retail disintermediation into stock brokerage accounts from bank depository accounts as the Federal Reserve continues to raise short-term interest rates and the 10-year and over bond rates remain flat,” he said.
No. 16 Comerica Bank, a unit of Comerica Inc. in Detroit, saw deposits in OC decline 13% to $332 million. Comerica added two branches in OC for a total of three.
Overall, banks boosted their OC branch count by 9% to 345. Local employment grew 2% to about 11,000.
Dropping off the list was former No. 24 First Security Thrift Co. in Orange, which didn’t have enough deposits to make the list this year.
Newcomers included No. 23 Sun Country Bank in Santa Ana, which bought Privest Bank last year, and No. 24 Imperial Capital Bank in Costa Mesa.
