While tech companies often get the glory for rapid growth, six Orange County-based banks are among the leaders on the Business Journal’s list of publicly traded companies with the fastest-growing revenue over a two-year period ended June 30.
And unlike prior eras in the region’s banking sector, subprime lending had nothing to do with that growth.
• Irvine-based Pacific Premier Bancorp Inc. (Nasdaq: PPBI) ranked No. 2 among midsized public companies with $338.4 million in revenue for the 12 months ended June, good for a 133% jump in sales from the same period ended in 2016.
“It’s part of our strategy for both organic and acquisitive growth,” Pacific Premier Chief Executive Steve Gardner said in an interview.
• Coming in third among midsize companies—those with revenue between $100 million and $500 million—is Irvine-based First Foundation Inc. (Nasdaq: FFWM); it reported $201.8 million in revenue, or 82% higher compared to two years earlier.
“I really believe that our executive management team has worked really hard to grow,” Chief Executive Scott Kavanaugh said in an interview when asked the reason for the increased sales. “We got a great management team, great employees who are able to drag in new accounts. It is really simple.”
• Both companies trailed Irvine tech hotshot Alteryx Inc., which ranked No. 1 among midsized companies with two-year sales growth of 196% to $162.4 million, according to the Business Journal’s annual list.
Increased Competition
OC-based banks have been steadily growing; the Business Journal’s list in the Nov. 5 edition will show asset growth of 10.4% for the area’s largest lenders.
Four other banks made the Business Journal’s list of small public companies, which we define as under $100 million in revenue.
• Garden Grove-based US Metro Bank (OTC: USMT) reported a 155% leap to $20.7 million in sales, good for second place. Irvine-based CalWest Bancorp (OTC: CALW) placed fifth, reporting a 53% gain to $8.3 million.
• Costa Mesa-based Pacific Mercantile Bancorp (Nasdaq: PMBC) ranked No. 6 with $62.9 million in revenue, a 49% jump from two years earlier.
• Meanwhile, Irvine-based CommerceWest Bank (OTC: CWBK) placed 10th, growing revenue 18% to $25 million.
The impressive sales growth has also led to an increase in competition. Banks like Fifth Third Bancorp, City National Bank and Umpqua Holdings Corp. have announced plans to expand employee count in Orange County.
“You look around, and there are a fair number of banks in Orange County,” Kavanaugh said. “The reality is we have a great niche in this marketplace. I feel we can hold our own.”
Nonetheless, OC banks are struggling on Wall Street.
Pacific Premier, First Foundation and Pacific Mercantile reported third-quarter earnings last week (see story, page 1).
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Gardner has been chief executive of Pacific Premier since 2000, when it operated under a different name. Life Financial Corp. was near bankruptcy and formerly based in Riverside. He’s steadily grown the bank from $826.8 million in assets in 2010 to $11.5 billion as of Sept. 30.
“We’ve done 10 acquisitions in the last seven years,” he said.
The biggest purchase occurred this year when it paid $629.2 billion to acquire Grandpoint Capital Inc., a Los Angeles bank with $3.2 billion in assets. The purchase, completed July 1, will be reflected in next year’s list.
The purchase catapulted Pacific Premier to the biggest OC-based bank by assets, passing Santa Ana’s Banc of California Inc. (NYSE: BANC), which has $10.3 billion.
Pacific Premier is also boosting sales organically, principally from small and middle-market businesses throughout Southern and Central California and the state of Washington, Gardner said.
Gardner is still bullish about the local economy.
“Orange County is continuing to grow strongly,” he said.
Pacific Premier’s employee count in Orange County has climbed 49% to 409 employees. Companywide, the figure has more than doubled to 1,152.
FFWM
First Foundation’s assets have grown from $1.9 billion when it went public in 2015 to $5.5 billion as of Sept. 30.
In the past year, half of First Foundation’s sales growth has come organically, the other half from acquisitions, Kavanaugh estimated.
In June, the company completed the acquisition of PBB Bancorp, owner of Premier Bank, adding $640 million in assets. Last year, it bought community lender 1st Bancorp, which added $411 million in assets.
Kavanaugh doesn’t expect to make as many acquisitions. Two years ago, acquisitions were easier because of lower interest rates and the company’s stock having a higher valuation, Kavanaugh said.
“It seems to be getting more difficult” to make deals, he said.
Like Gardner, Kavanaugh is bullish on the Orange County economy, which he called “incredibly strong.”
“I’m not seeing any weaknesses. I’m only seeing strength,” he said. “Employment costs have jumped a little bit because unemployment is very low.”
The company’s local employees climbed 10% to 277; companywide, the number jumped 30% to 494. Kavanaugh said the firm will continue to hire in Orange County, particularly in the areas of compliance and regulations.
