Everyone’s been buzzing about the minor interest rate hike last week, but how did the previous low-rate world affect investments this past year?
Ultralow interest rates pushed some wealthy Angelenos to finance airplane purchases and snap up farm and timber land this year, according to Brad Larsen, managing director for U.S. Trust in Century City, a Bank of America private wealth management division.
According to Larsen, the majority of planes are normally bought with cash, but more customers sought to finance that roughly $20 million-$50 million purchase over the past year to lock in low interest rates before a hike. These borrowers were wealthy individuals who possibly owned a few companies and are taking many flights to New York in a smaller aircraft or even to Hong Kong on a nearly 20-passenger Gulfstream jet, said Larsen, rattling off plane makes and models.
“I wasn’t familiar with them before I had this job,” he said. “That’s how many airplane loans we do.”
He’s had to become equally knowledgeable about investing in ranches. Because low rates had depressed fixed-income yields so much, some high-net-worth Angelenos seeking better returns plunked their cash down on farm and timber land, Larsen said. He added that as a large trust company, U.S. Trust has become trustee for quite a collection of acreage, for which it hires farmers and lumberjacks to manage.
Larsen said a lot of investors like the tangible asset because they can actually visit it.
“Grandpa and grandma own timber or farm land and can go have a weeklong retreat up there,” Larsen said. “Our management team will go out there and have them plant trees or do something that gets them involved in what they want to do and have them be involved with the kids and grandkids. We call it the romantic side of the asset class.”
Building Out
Bank of the West’s Pasadena wealth management office has had such a good year, it needs room to grow.
Also part of Paris parent BNP Paribas’ global wealth management business, the team has secured a lease for 5,000 square feet on the ground floor of 595 E. Colorado Blvd., where there’s a Bank of the West branch in the lobby. The team previously had a couple of thousand square feet in an ad hoc space next to the branch.
“The Pasadena team is our No. 1 wealth market in the entire country in 2015 and growing,” said Edward Mora, regional manager for Southern California and the Southwest for Bank of the West’s wealth management group. “We knew Southern California was going to be a bedrock of the business.”
Mora said the Pasadena group’s banner year is owing to the acquisition of high-net-worth clients in that region as well as larger relationships than it has seen in the past. And much of that growth has been fostered by new hires. The team, which has nearly doubled over the past year, will have 14 people in the Colorado space.
He also gave credit to Bank of the West’s commercial banking group in Pasadena.
“We really leveraged the bank’s commercial presence in working with those business owners,” he said of turning those customers into private wealth banking clients.
Employee Owned
Pasadena’s Clifford Swan Investment Counsel didn’t have to look far for its new equity interest: itself.
The purchase by the firm, majority owned by downtown L.A.’s City National Bank, will result in Clifford Swan becoming completely employee owned. The deal is expected to close by the end of the month.
“We are thrilled to be able to begin our second century as investment counselors with this exciting step,” said Clifford Swan Chief Executive Linda Davis Taylor in a statement. “As the nation’s oldest registered investment advisory firm, we are proud of our history and pleased to be able to return to our roots as an independently owned firm.”
The Pasadena company manages $2.5 billion in assets and advises individuals, families and midsize institutions.
Executive moves
CIT Bank, L.A.’s newest biggest bank by assets, has appointed Ellen R. Alemany chief executive. She has replaced former OneWest Chief Executive Joseph Otting, who also became chief executive of Pasadena’s CIT Bank after the two banks combined operations. … San Francisco’s Wells Fargo & Co. has promoted L.A. resident Timothy J. Sloan from the head of wholesale banking to chief operating officer.
Staff reporter Marni Usheroff can be reached at [email protected] or (323) 549-5225, ext. 229.
