FirstBank, one of the nation’s largest privately held banks, started the year with record-breaking growth. Across FirstBank’s California branches, with three located in Palm Desert and one in Indio, deposits grew 29.4 percent from $439.3 million to $568.4 million in the first quarter of 2021 compared to Q1 2020. California loans and assets remained steady at $279.8 million in loans and $289.4 million in assets.
“The time and effort we have dedicated to our customers and community are reflected in yet another stellar quarterly report,” said Jake Wuest, FirstBank California Market President. “If the first-quarter results are indicative of what is in store for FirstBank, customers can be assured that we will continue to do what is right for them, regardless of their needs or situation.”
Across all of FirstBank’s trade areas, the bank had a 29.1 percent increase in total deposits to $23.5 billion from the same period last year. The bank’s total assets grew by 28 percent to $25.9 billion and net loans were up by 16.3 percent from last year to $13.4 billion.
“We are humbled by the strength, perseverance, and level of dedication our entire organization demonstrated in helping serve small business and underserved populations,” said Jim Reuter, CEO of FirstBank. “Our company’s mission has been a guiding light, not only in helping our strategic growth, but it’s kept us focused on what matters – supporting customers and uplifting communities.”
The connection between FirstBank and Palm Desert began in 1985 with the opening of the bank’s first California branch, which is still located at the intersection of Highway 111 and Monterey Avenue. According to Wuest, “It happened because our founder, Roger Reisher, had a vacation home in the region. He was spending a lot of time here later in his career and thought it would be a good idea to have a bank here as well.” FirstBank now has a total of 50 employees spread among the four local branches.
The Pandemic Created a New Dynamic in Banking
A record $2 trillion surge in cash hit the deposit accounts of U.S. banks since the coronavirus first struck the U.S. in January of 2020, according to FDIC data.
The huge flow of money into banks has no precedent in history: in April 2021 alone, U.S. bank deposits grew by $865 billion, more than the previous record for an entire year.
The gains were all driven, in one way or another, by the response to the pandemic. The government unleashed hundreds of billions of dollars to bolster small businesses and individuals via stimulus checks and unemployment benefits. The Federal Reserve began a barrage of efforts to support financial markets, including an unlimited bond-buying program. And an uncertain future prompted decision-makers, from two-person households to global corporations, to hoard cash.
“The combination of people saving money during the pandemic combined with the government stimulus payments is what helped bolster bank deposits so strongly across the country and here in our region,” said Wuest.
Wuest points out that the extreme level of deposits in the banking system will greatly benefit local companies as the economy heads back to normal. “I think that this is something local businesses should be excited about because banks are sitting on a ton of deposits and we’re looking for investment vehicles for those deposits. That is lending for banks. So, banks right now are aggressively pursuing lending and that is exactly what you want to hear as a business owner; to be able to get competitive rates and terms so you can grow, hire more people or whatever you need to do. So, you can utilize the banking system now to do that because there’s such a significant appetite to lend money right now.”
Opportunity Abounds for the Local Banking Sector
When asked to weigh in on the near-term future for banking in Greater Palm Springs, Wuest sees many opportunities based on what he has been experiencing in the local economy. “FirstBank handles the full scope of lending, so on the consumer side it continues to be mortgages and home equity loans that drive business,” he said. “On the business lending side, where we see the best opportunities are in owner-occupied commercial real estate which has been really strong during the past year and will continue, and we’re seeing a lot of movement in the residential development sector where many projects are moving forward and coming up. And, a lot of businesses are looking to buy buildings and have been for the past nine months or so. Based on the long-term fixed rates, it’s a great time to buy a building.”
In addition to the well-document big city to rural migration of individuals and families facilitated in part by the telecommuting phenomenon, Wuest says that FirstBank has been working with numerous investors from the coastal Southern California counties looking for good investments in our region.
“I think there is a great opportunity in multi-family housing which we need so badly here. We’ve seen a lot of money coming in from outside of the valley to invest in multi-family plus most other kinds of commercial real estate, including retail because the cap rates are so tight in other areas of Southern California, and we’ve heard from investors looking to get involved in the Coachella Valley because they can get a little better yield on their money, so we are competitive here in that regard. There’s less competition for acquiring some of the properties for sale and the yield is slightly higher. With so much money out there, everyone is looking for the best places to invest for the highest returns.”
Beyond the real estate sector, Wuest notes that businesses looking to expand or grow through loans for things like receivable or inventory lines of credit and equipment purchases are also important opportunities for the bank. “In particular, companies in the healthcare sector here are doing well along with some growth and needs in the industrial sector and actually some need for financing office development as we work through a growing return to work philosophy and begin to see what that looks like going forward,” Wuest added.
The bank has seven business lending officers in Greater Palm Springs working with portfolios of local clients. “We have a strong team that’s always working hard and competing for market share in the region,” said Wuest. As an example of the bank’s capacity to serve a growing economy, Wuest noted that FirstBank did about 350 first round PPP loans for local companies through its local operations for roughly $38 million.
“For the bank as a whole for the two rounds, we did 20,000 total PPP loans,” he said. “We dedicated hundreds of staff members throughout the company to lean in to help our customers because that was the biggest need at the time and we’re very proud of the numbers we were able to accomplish for our customers and the efficiency with which we did it. The program was stood up by the government very quickly and banks had to adapt with lots of resources and manpower to get these loans done. One of the great things about FirstBank is that because we are one of the largest privately held banks in the country it allows us to have a community bank feel but also have the resources of the largest banks to be able to invest in technology or to be able to adapt quickly to allocate resources when necessary.”
Optimism Growing for Greater Palm Springs
Looking toward the future of the local economy, Wuest highlights his main reasons for optimism. “We’ve seen it in the housing prices, the residential development is heating up and people are moving out of more crowded urban areas into the Coachella Valley. I think in the upcoming five years there’s going to be a significant amount of optimism and growth. We see the airlines expanding service, major projects like the Coachella Valley Arena, greatly improving tourism, more commercial activity and several big, important projects coming along. There’s a lot to be optimistic about here.”