Banc of California Assets Near $8.3 Billion
Originally published in The Orange County Register, Hannah Madans
February 16, 2016, 10:49 AM
An expansion into personal banking and $7 billion in lending added up to a record-breaking year for Irvine-based Banc of California.
The bank on Jan. 28 reported net income of $62 million in 2015, a record year. The company also reported $7.1 billion in loans, another record.
The bank became Orange County’s largest bank in November 2014 after it absorbed Popular Community Bank’s California branches.
The acquisition added 20 retail branches in Los Angeles and Orange counties, $1.1 billion in loans and $1.1 billion in deposit balances.
The bank now has assets of roughly $8.2 billion. On Feb. 1, the bank announced an offering of 5 million depositary shares at $25 per share, for a total of $125 million. The company expects to use the proceeds from the offering for general corporate purposes.The bank has also grown to 1,700 from 600 employees since 2012. The company recently bought a skyscraper on the Santa Ana-Costa Mesa border to accommodate the bank’s growth.Chief executive Steve Sugarman sat down with the Register to discuss the bank’s future. His answers have been edited for length and clarity.
Q. You became the largest bank in Orange County in 2014. What changed after the acquisition of Popular bank?
A. We’ve grown another $2 billion to $3 billion organically on top of the growth from that acquisition. Since last November, we’ve grown about $3.2 billion in total assets. The most meaningful change we’re seeing is really for the shareholders. We grew our profits last year three times and were the number one ranked bank for total shareholder returns on the West Coast.
Q. How have the Popular Community Bank branches that were acquired fared?
A. We’ve been able to retain well north of 90 percent of all deposits. And also have grown new deposits on top of that. We’ve also been able to make inroads and lend more to small businesses.
Q. How has your growth shifted away from acquisitions?
A. When we passed $5 billion in assets, we had built the business – the platform and the client base – to really be focused on execution. In the fourth quarter (of 2015) our deposit growth came primarily not from new accounts, but from meaningful increases in the average size of each account. We’re becoming the primary bank to our clients.
Q. Other Southern California banks such as City National and OneWest were bought by Canadian and East Coast entities. Do you see any gaps here or opportunities for Banc of California?
A. There are huge gaps and they’ve been getting worse not better. National and international banks use California as a source to gather deposits, but then they lend the money out in New York, and that is a void in the market. There’s a lack of small- and private-business lending. Banc of California has this incredible opportunity to fill this void. We lend in the same markets (from which) we take our deposits. We lent $7.1 billion in 2015 (a bank record).
Q. What do you see as the major trends for 2016?
A. Those banks that struggle with growth are going to continue to acquire or be acquired. Those banks that have a value proposition that creates organic growth will thrive and see the best returns, the best impact on the communities and the best impact for shareholders.
Q. The bank recently started offering foreign exchange and international wire services in more than 100 currencies worldwide. How will this benefit the bank?
A. Our retail clients as well as our business clients transact across state and international borders and need to manage the risks associated with interest rate fluctuations on their loans and their businesses. These products complement other products we’ve recently been launching such as trust services.
Q. What do you think is the future of banking?
A. There’s always a need to have access to capital and financing for your businesses, your home and yourself. Our view is that the key to being California’s bank is for those creditworthy borrowers to know that they have access to that capital in good times and bad times.
Contact the writer: hmadans@ocregister.com
Twitter: @HannahMadans