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Wednesday, Aug 17, 2022
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Commercial Banks Roar out of Pandemic

Commercial banks operating in Orange County continue to show that they have weathered well the economic turmoil caused by the pandemic.

The 45 banks on the Business Journal’s annual list reported deposits climbed 15% to $174.9 billion for the period ended June 30, 2021. A year ago, bank deposits climbed 23%. By contrast, deposit growth in the three prior years was 5.4% in 2019, 2.1% in 2018 and 9% in 2017.

Twenty-seven of the banks reported deposit growth topping 10%.

However, the industry’s headcount in Orange County continues to decline, falling 5.5% to 15,237. The number of branches also dropped to 569 from 588 a year ago. Only one bank increased its branch count on this year’s list.

BofA Tops

Bank of America Corp. for the fourth straight year claimed the top spot as its deposits climbed 14% to $31 billion, an astounding $6 billion increase from two years prior.

“We have had a double-digit growth of new clients and new accounts,” said Alexandria Bravo, who leads the Orange County retail unit for Bank of America. “It’s one of the highest growths in new clients that we have had in recent years.”

One reason for the growth is its “digital first” program that emphasizes new convenient technology, so clients don’t have to visit the branches to do banking.

Another reason was its rewards program, which clients “love,” Bravo said. A third reason was outreach to diverse markets where Bank of America makes sure its representatives can speak languages like Vietnamese or Spanish.

“That focus has helped accelerate clients,” Bravo said.

Nipping at its heels was No. 2 Wells Fargo, which before BofA was the largest in Orange County; its OC deposits increased 14% to $30.5 billion. The bank has stopped the drain of its deposits following a national account fraud scandal. In 2020, deposits increased 21%.

However, its employee count continues to fall, dropping 14% to 1,946. It had fallen 16% the prior year. Nonetheless, it’s increasing its OC branches to 104, up from 93 a year ago.

No. 3 JPMorgan Chase & Co. reported another banner year, boosting deposits 26% to $27.1 billion. A year prior, deposits climbed 28%.

Umpqua’s High Growth

The list ranks commercial banks with branches here and a minimum of $200 million in local deposits based on data from the Federal Deposit Insurance Corp. The FDIC lists another 65 banks with offices in Orange County that don’t meet the $200 million minimum for the Business Journal list.

The banks supplied information on local employees and branches, statistics that don’t factor into rankings.

The highest grower on the list was Umpqua Bank, which increased deposits 167% to $597.4 million.

“Our Newport Beach office is doing incredibly well,” said Richard Cabrera, head of corporate and commercial banking for Umpqua and who works out of the Newport Beach office. “It’s one of the best performing, if not the best in our system.”

He said the Portland, Ore.-based bank (Nasdaq: UMPQ) will soon have more resources following its $5 billion merger with Columbia Banking Systems (Nasdaq: COLB). The combined entity will become one of the largest banks on the West Coast with more than $50 billion in assets. The transaction is expected to close around next summer.

Notable Declines

• Seven banks reported a decline in deposits, compared with four banks in the prior year, nine in 2019 and 16 in 2018.

The biggest drop was 20% at Pacific Western Bank, to $3.1 billion.

• Deposits fell about 1% at Santa Ana-based Banc of California Inc. to $3.6 billion.  

CEO Jared Wolff has embarked on a strategy to eliminate high-paying deposits in favor of relationship banking where deposits don’t pay interest.

Deposits should increase in next year’s list as Banc of California completed its acquisition last October of Costa Mesa-based Pacific Mercantile Bancrop, which brings in $1.3 billion in deposits.

n Irvine’s Commercial Bank of California moved up four spots to No. 23 as its OC deposits rose 25% to $1.1 billion.

Loans made during the pandemic, called the Personal Protection Program (PPP) helped the bank, CEO Ash Patel told the Business Journal.

“We ended up getting a lot more customers than we anticipated through the digital channel, which had 60% growth,” Patel said.

“When omicron struck, we got more customers as larger banks were not serving them as well.”

Growing industries include education, automotive, ecommerce and healthcare while declining industries are hospitality, food and services, Patel said.

An emphasis on technology also helped attract more customers, he said.

“Our focus is on technology acquisitions,” Patel said. “We’ll continue to look for technology platforms. Most banks are trying to become fintech. We’re no different.” 

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