As we prepare to bid adieu to 2025 – a year defined by economic uncertainty, high interest rates and fear of a possible recession – mark your calendars for improved investment activity in the new year.
Tony Sciarrino, head of U.S. commercial banking at BMO Bank, believes there’s an air of cautious optimism moving forward.
Sciarrino, a SoCal native and an 18-year Angeleno, began his post at BMO in March after seven years with JPMorgan Chase and 26 years with Bank of America Merrill Lynch holding several commercial banking-focused senior roles.
Now leading BMO’s 3,000-person commercial team, Sciarrino spoke with the Business Journal about client sentiment, investment aptitude and noteworthy industries in L.A. as well as nationally.
Nine months into your role at BMO, what have your priorities been?
At BMO, we deliver expertise to clients – (be it) private equity, food and consumer, real estate, engineering and construction companies, media, technology. I can go on and on. My No. 1 goal when I joined the firm was to work on delivering our expertise locally to every company that we work with in the United States to help them grow their businesses in different ways. The first part of my journey was encouraging collaboration across teams and also looking at opportunities to invest in the business.
I know Southern California super well because I spent the last 34 years of my career (here). So, I knew we had an amazing opportunity to invest in our business in Southern California, and I hired a number of bankers throughout the organization but mainly in the western part of the U.S. As an example, we have a new head of our real estate business that’s joining us. We have a new head of our government and nonprofit group, a new head of our L.A. region and a new head of our western region – all based out of Los Angeles. Los Angeles is a market that’s very important to us at BMO. We have great market share in Milwaukee and in Chicago. L.A. and San Francisco are going to be the next two markets that we’ll dominate in a similar fashion.
You were quoted recently saying you anticipate BMO will one day be known as “California’s bank.” Can you expand on what that looks like and outline your strategies to get there?
Going back, my entire career has been in California in a number of different markets, and really understanding the California economy, which is the fourth largest economy in the world. And that economy is led by a number of industries: media, technology, business services, insurance services and industrial. Having the expertise that we have, coupled with what we do on the investment banking side, allows us to deliver to every client in the region. And you know, historically, we have not had enough resources, meaning people. So, we’ve invested heavily in people in order to bring in the absolute best bankers in the market…We’ve heavily invested in this economy because it’s the largest TAM (total addressable market) in the U.S. And so for us, having people that really understand the local geography with the expertise allows us to win in each of those markets which we operate.
Looking back at BMO’s acquisition of Bank of the West, a lot of the conversation around that focused on how the deal expanded BMO’s retail business line but I was also wondering how it shaped BMO’s commercial presence in California.
It’s been terrific with the conversion of branches and technology and the branding, and you see us investing in Los Angeles. You’ve seen it with BMO Stadium, making a huge investment in Southern California around that. That acquisition really helps us, not only with the name recognition in the marketplace – similar to what we have in Chicago and Wisconsin and some other places – but also we wouldn’t be at the point where we are today without that acquisition. And now it’s really the opportunity to capitalize on that investment with the right sort of talent and people in the geographies to go and continue to grow that baseline of clients that we inherited through them…
Bank of the West had this 200-year history in California. Having those long-term clients was really important to us. I know that we sort of entered the market a couple of years ago but just know that those relationships go back a long period of time.
It’s obviously been an interesting year for businesses from impacts of tariff policies, resulting supply chain issues and a high-interest rate environment. Can you give an overview of investment appetite throughout the year, what you’re seeing more recently and what you expect to see in 2026?
I would characterize it as cautiously optimistic. I spend every week in a different geography around the U.S to meet with different clients in different industries from breakfast this morning, dinner last night to breakfast yesterday. And as we talk about their current state, it’s cautiously optimistic about the near-term uncertainty and looking at investments for them where they can measure what type of return on investment they’re going to get. So, we’re in an environment that’s just a little bit more cautious.
The good news is that I feel the momentum picking up here in the last 30 days. Looking at our M&A business, we will have closed more deals (from Nov. 1 to Jan. 31) than we did all last year because of the momentum. Some of this is just the backlog of deals, but the momentum of what we’re seeing in the pickup in the marketplace feels better. It’s not at historic levels like back in 2021 but the momentum feels better.
What industries are garnering the most interest?
In L.A. specifically, there’s still a very large population of entrepreneurs there that are resilient and they love investing and looking for new (avenues), especially in tech and entertainment. So, we’ve seen our tech and entertainment books grow nicely in that geography…
If you think about the ecosystem of venture capital, there’s a lot of great venture capital firms that are investing in startups in the greater Los Angeles area. What I’ve seen as you look at digital footprints for these companies, their use of technology, not only for whatever business that they’re in, but how they use technology throughout their working capital, and how they manage it with their treasury payments and the utilization of AI tools is remarkable in Los Angeles. Silicon Valley tends to get the tech haven (status) but there’s so much innovation and entrepreneurship in L.A. and partnering and investing in those types of companies is key to our success… We’re spending a lot of time with our technology and media teams (which are) growing very rapidly. We’re seeing lots of investments in the media space, and so we’re deploying a lot of capital to both technology and media companies…
Where we’ve also really seen the pickup in demand is in our real estate portfolio. We’ve partnered with some very large Los Angeles-based developers working with them on a number of projects. And as you can imagine, with interest rates being lowered here a couple of times and maybe some other rate reductions in the next month or two, we’ve seen a pickup in demand… in the last two or three months in our real estate portfolio.
I read a report from Avison Young which showed that from the first quarter to the third quarter of this year, private buyers accounted for nearly 62% of commercial real estate transactions in L.A. compared to about 20% for institutional investors. Do you anticipate an uptick in institutional investment moving forward?
Yes, I’ve seen the demand pick up on the institutional side, especially in the asset classes of multifamily and health care. We’ve done a couple of very large transactions, not only in Los Angeles, but throughout the U.S., especially in those two asset classes.
I know middle market business is especially prevalent in L.A. Are you seeing any unique perspectives from that segment?
I’ve spent most of my career, call it 30 years or so, in the middle market part of the industry so I have a pretty good feel of the middle market space. Middle market companies are very relationship driven, and that’s why in our business, it’s really important to develop trust with those entrepreneurs, business owners and/or private equity firms that are making those investments. We’ve seen specifically in L.A., given the volatility in the markets with lots going on with tariffs, interest rates or just general overall consumer demand, what’s important to a lot of our clients and companies in general is just having the relationship with a banker that you can trust…to help you navigate through whatever situation you might be experiencing. And so I feel proud to be part of a firm that has those values, and my team has spent a lot of time sort of working through those situations with each of our clients. That also creates opportunities for investment, opportunities for M&A and opportunities for expansion of their organic growth for those companies as well.
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