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Wednesday, Aug 10, 2022

OC Banks See Surprising Revenue Growth

Banks are in an industry not typically noted for large jumps in revenue growth.

Tell that to those based in Orange County.

Six banks made the Business Journal’s annual list of fastest-growing publicly traded companies over a two-year period.

The growth came through a combination of new sales programs, branches and acquisitions.

Wall Street wasn’t always impressed as shares of four of these banks fell during the two-year growth period. By comparison, the benchmark KBW Nasdaq Bank Index climbed 2.6% during that same period.

US Metro Bank (OTC: USMT) topped the growth in banks with $25.3 million in revenue for the 12-month period ended June 30, a 147% jump from two years prior. Overall, it placed fifth on the list of small companies with under $100 million in sales.

The Garden Grove-based bank, which primarily services Korean Americans, in the past two years has opened branches in Buena Park and Los Angeles’ Koreatown and Fashion District.

“We are excited about the planned growth of the bank in 2019 and look forward to the continuing profitable deployment of our excess capital,” Chief Executive Dong II Kim said in a July statement about its second-quarter growth.

US Metro ran into problems during the 2008 financial crisis and was placed under regulatory consent orders for a couple of years. Kim, who founded the company in 2006 before leaving for a couple years, returned to it in 2013; he eventually stabilized the bank, helping it exit the consent orders and raising $21 million in capital in 2017.

While it’s a thinly traded stock, its shares rose 26% during this two-year period.

5 More Growing

Other fast-growing banks include:

• Irvine’s Pacific Premier Bancorp Inc. (Nasdaq: PPBI) saw a 147% growth over a two-year period to $557.7 million, making it the highest-ranked company on the list of large companies with more than $500 million in growth.

A key reason for that growth was acquisitions. In the past two years, it has almost tripled its assets through the acquisitions of three banks, including most notably Grandpoint Capital Inc. 

During that period, its shares have fallen about 19%; its current market cap is around $1.9 billion, the highest for a bank based in Orange County.

• First Foundation Inc., (Nasdaq: FFWM) which is also headquartered in Irvine, saw its two-year revenue climb 69% to $267.9 million, good for second place on the list of midsized companies with revenue from $100 million to $500 million.

Its growth was also aided by acquisitions, notably Community First Bank in the Sacramento region and Los Angeles-based PBB Bancorp.

During that period, its shares fell about 15% and the company last week sported a $709 million market cap.

• Costa Mesa-based Pacific Mercantile Bancorp (Nasdaq: PMBC) boosted revenue 41% over the two-year period to $69.6 million, good for No. 7 on the small company list.

The bank’s work includes Horizon Analytics, an in-house program to provide detailed financial information to companies with annual sales of $10 million to $70 million. The program uses a combination of publicly available information with financial analysis techniques that are typically available only to larger companies.

Its shares fell 5% during that two-year period and it traded recently at a $170 million market cap.

• CalWest Bancorp (OTC: CALW) of Irvine reported its revenue climbed 37% over the past two years to $9.6 million, which placed it No. 8 on the small companies list.

The bank attributed its growth to staff expansion and improving its branch locations. Its shares climbed 18% during that period.

The growth was enough to attract a suitor. Last week, the company said it will be purchased for $32 million by Bank of Southern California (OTC: BCAL), which is headquartered in San Diego.

• Irvine-based CommerceWest Bank (OTC: CWBK) reported its two-year sales climbed 24% to $28.2 million, placing it No. 10 on the small company list.

Ivo Tjan, who founded the bank in 2001 and is the only CEO the bank has ever known, made significant changes in recent years such as shuttering all of its branches and ending its voice message system so customers are directly linked to bankers.

Tjan said his focus is lending to firms with revenue between $5 million and $100 million, companies that he said are underserved by larger banks.

“We’re not all things to all people. We’re all things to some people,” Tjan told the Business Journal in a prior interview. “It’s a simple business model. We customize and tailor-make things for businesses.”

Its shares dropped about 2.8% during that period.

Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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