In last year’s Money Issue, financial leaders hinted at pausing expansion plans and building collateral to brace for a hard recession caused by rising inflation and steep interest rate hikes.
A year on, and after the regional banking crisis shook out major players, those companies have lately posted job openings as bankers signal businesses begin to fill credit pipelines.
National financial institutions with more than a trillion dollars in assets gear up for expansion in the Los Angeles. Legacy players including Bank of America and newer entrants like PNC Financial Services Group Inc. and the Bank of Montreal all voiced optimism about the new year.
As the Federal Reserve now levels interest rates and hints at future tick downs, banks are betting their economists’ predictions for a soft landing will come true. Current staff increases show leaders are spending now in hopes the floodgates will open for business banking soon.
Courtship on billboards
Many Angelenos likely recognize the Bank of Montreal acronym, even if the name itself brings blank stares; last year, its red and blue BMO signage appeared at heavily trafficked intersections and above freeways throughout Los Angeles.
The costliest branding, however, came from a $100 million naming rights deal inked last January that replaced Banc of California as the title sponsor for the Los Angeles Football Club’s stadium in University Park.
According to a spokesperson, the company’s investment in visibility throughout the city communicates Bank of Montreal’s goal of being a viable competitor in a market nearly 2,500 miles from its headquarters.
“Brand recognition is one of the most powerful factors in attracting new customers, and our brand campaign in Los Angeles reinforces the scale and strength of BMO,” the spokesperson said.
The Bank of Montreal’s sponsorship deal with LAFC was announced just one day after its $16.3 billion acquisition of the San Francisco-based Bank of the West won regulatory approval – a deal that took more than two years to finalize.
Now the Canadian brand oversees nine offices throughout Los Angeles County and houses leadership across all bank divisions, including personal and business banking, commercial banking, wealth management and capital markets.
Following its westward expansion, The Bank of Montreal now has $1.3 trillion in assets, which nabbed it a spot in the list of top 10 banks in the United States.
Despite a rich balance sheet funding the expansion here, the merger and its rollout hasn’t been without hiccups.
Bank of Montreal’s fourth-quarter earnings came up short of Wall Street’s expectations as costs related to expansion ballooned past premerger expectations.
“Integration costs are expected to be approximately $1.9 billion, reflecting higher expenses associated with the later than originally anticipated closing date, higher contract termination costs and preconversion expenses, which were instrumental in executing one of the most successful integrations in the industry,” a BMO spokesperson said in a statement.
Despite the merger’s expensive process, it looks like the marketing campaign has captured customer attention. BMO says consumer deposits from the Los Angeles have tripled in the past year, and the bank has closed thousands of deals between its business banking and capital markets teams.
Other investments
While Bank of Montreal may have led the local financial sector for marketing budgets last year, this year its competition is quietly growing its staff and gearing up for client acquisition.
PNC, the Pittsburgh-based bank that through acquisition expanded into California nearly three years ago, says it is hiring across all lines of business. After adding a local banking executive to its corporate banking practice and bringing in a new wealth management lead late last year, the bank’s regional president, Todd Wilson, says that the bank has the resources to increase market share.
“We’ve done a great job in my mind of building out that senior leadership team, which has naturally led to adding more clients, adding more deposits, taking advantage of Silicon Valley Bank and others in the market having some stumbles,” he said. “So that luckily led to growth and revenue growth and new client acquisitions.”
Bank of America is also growing its staff, primarily in its investment banking division. Raul Anaya, the head of the bank’s business banking in Los Angeles, says clients have become more comfortable discussing deals, and his team’s growth is based on optimism about transactions ramping up for the middle-market companies that waited on the sidelines last year.
“Whenever you have clarity for the future, then less volatility, then that’s when companies of all sizes feel more comfortable to make the big investment decisions, and so for that reason we’re pretty optimistic in terms of expansion,” Anaya said.
With more than 5,000 employees based here already, Bank of America operates as one of the largest financial institutions in Los Angeles County. As far as fellow national banks vying for clients in the wake of the regional bank chaos, Anaya isn’t concerned about concentration here.
“It’s always been a very competitive market in L.A., and what you’re seeing here is no different than what we’ve all been used to,” he said.
