Banking on California a winning business model

In just six years, “California’s bank” has emerged as one of America’s fastest-growing banks — from $700 million in assets in 2010 to nearly $10 billion today.

Since the end of 2014, it’s been the best-performing bank stock in the country while pursuing a banking strategy even Bernie Sanders might love: serving the state’s diverse array of small and midsize businesses.

[...] the intensity of Banc of California’s focus on defining itself by its Californianess is unmatched — and noteworthy for any enterprise, especially a bank in a globalized era when consolidation across borders is all the rage in the financial industry.

While bigger corporations dominate many American urban economies, California’s business base is “very democratic,” Sugarman says, with properties owned by individuals and families.



Because so many Californians work for themselves, even very creditworthy people don’t qualify for traditional mortgages.

[...] in a conservative commercial banking world that holds that “anything that grows fast is a weed,” Banc of California’s rapid success can be seen as suspicious, perhaps predicated on ill-advised pricing or risky lending.

The rapid growth is in part a function of launching a bank in the wake of a deep and widespread recession that left an enormous void in lending and liquidity as California banks failed and consolidated.

Will this California model endure? A bank tied to a state as volatile as California can expect a bumpy ride in the long term.