These developments are rekindling talk that Washington may once again be fertile ground for financial service firms, which have in the past decade become a significant component of the regional economy before struggling under the weight of the downturn.
High-profile firms such as Allied Capital have left the scene but others, such as investment bank FBR Capital Markets in Arlington and commercial lender CapitalSource in Chevy Chase, have shown new signs of life.
Richard J. Hendrix, chief executive of FBR Capital Markets, said his company’s core industries are showing promise, with the asset management division, for instance, turning a profit at the end of 2010. CapitalSource returned to profitability in the first quarter of this year, recording $3 million in net income due to an uptick in loan demand from small- and mid-sized businesses.
Adding jobs
The region is starting to record some employment growth in the financial services sector. About 2,000 jobs in that niche were added during the 12-month period ending in May, according to the Center for Regional Analysis at George Mason University.
Few local players are in a position to expand their staff, as many were roiled by exposure to the mortgage mess or stalled credit markets. Some firms have rebounded better than others. Large community banks, such as Cardinal Bank and Sandy Spring Bank, have posted a couple quarters of profit, while FBR is still narrowing its losses from sour subprime mortgage bets.
Non-bank lenders, Hendrix noted, such as hospitality real estate investment trusts, continue to have a strong presence in the Washington area. Bethesda’s bevy of REITs, such as Pebblebrook Hotel Trust, are among the most active investors in the country.
Along with this vehicle, Sandeep Dahiya, associate professor of finance in Georgetown University’s McDonough School of Business, expects the region’s cadre of venture capitalists to further expand in the coming years amid stronger macroeconomics.
The turbulent recovery hasn’t stopped some firms from expanding. Bethesda conglomerate RLJ Cos., started by Black Entertainment Television founder Robert L. Johnson, last week launched RLJ Fixed Income to acquire bonds and other debt instruments.
Johnson made headlines in May with the initial public offering of RLJ Lodging Trust, one of the largest hotel trusts, with a portfolio of 140 properties in 19 states. The IPO raised $495 million for the company, which plans to use most of the proceeds to repay debt and fuel growth.
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