Deposits in Santa Barbara County’s banking market have fallen for three straight years, the pension systems covering local public workers remain short of fully funded, offshore oil production is rising for the first time in a decade, and the county’s farms posted a record $2.24 billion year.

Deposits at FDIC-insured banks in the Santa Maria-Santa Barbara market totaled $14.2 billion in the June 2025 reporting year, the third consecutive annual decline. The market’s deposit base peaked at $18.0 billion in 2022, then fell 14.5% in 2023, 6.1% in 2024, and 1.6% in 2025. The pace of decline has slowed each year, but the cumulative drawdown now stands at 21%.

The 2022 peak itself was unusual. Local deposits swelled from $12.7 billion in 2019 to $18.0 billion in 2022 as pandemic-era stimulus, reduced spending, and asset-price gains pushed cash into bank accounts, and the three years since have unwound most of that surge. Deposits remain well above their pre-pandemic level in dollar terms, though these figures are not adjusted for inflation, so part of the longer-run growth reflects rising prices rather than rising real balances.

For the community banks that anchor local lending, the deposit base sets how much they can lend. A market that holds $3.8 billion less in deposits than it did three years ago is a market with less local funding for mortgages, construction loans, and business credit.

JPMorgan Chase held 18.1% of the market’s deposits in 2025, Bank of America and Wells Fargo 14.9% each, and U.S. Bank 11.6%. Together the four national franchises controlled 59.5% of the $14.2 billion market. Montecito Bank & Trust ranked fifth at 11.3%, with $1.6 billion in local deposits spread across 12 offices, as many as any bank in the market.

The Market Concentration (HHI) in banking has barely moved in eighteen years, even as the number of banks operating locally fell from 25 in 2007 to 18 in 2025. The chart above tracks this through the Herfindahl-Hirschman Index (HHI), a standard concentration measure that sums the squared market shares of firms in the industry. Lower HHI values indicate more competition; higher values indicate greater concentration. It can range from close to zero to 1, with lower values indicating a less concentrated market.

The index has stayed inside a narrow band since 2007 because the banks that have exited since then were mostly small, their share absorbed roughly in proportion to the survivors’ existing positions rather than by any single acquirer.

For business owners and depositors, the practical read is that the local banking market is steady: a stable four-way national tier, one large local institution, and a long tail of community banks whose collective share has held up through nearly two decades of consolidation. For the community banks themselves, the pressing question is the shrinking deposit pool.

Loans and leases at the community banks serving the Santa Maria-Santa Barbara market totaled $19.2 billion at the end of 2022, measured in inflation-adjusted 2009 dollars, up from $6.4 billion at the end of 2016. The total dipped in 2023 and finished 2024 at $20.0 billion, holding the gains through a rate cycle that squeezed bank lending nationally.

The chart adds together the loans of every community bank that filed a regulatory report that quarter, and the set of banks reporting changed over the years. One sizable bank entered the market in 2017, which accounts for part of the rise, and another left through acquisition in late 2025, which produces the sharp drop at the end of the chart’s line rather than any pullback in lending. Held to the same seven banks throughout, inflation-adjusted lending still more than doubled between 2016 and 2022, up 118%.

Lending and deposits are now moving in opposite directions. These banks’ loan books ended 2024 near their peak, at $20.0 billion in 2009 dollars, while the local deposit pool fell 21%, from $18.0 billion in 2022 to $14.2 billion in 2025. Community banks fund loans mainly from local deposits, so three straight years of deposit decline is the main constraint on how much more this lending can grow.

The California Public Employees’ Retirement Fund (CalPERS), the pension system that covers Santa Barbara County government employees along with most city and special-district workers statewide, ended fiscal 2024 with assets equal to 73.9% of the benefits it has promised. The gap between promises and assets, called the unfunded liability, stood at $179 billion. The fund earned 9.3% on its investments that year, comfortably above its long-run assumptions, and the funded ratio still improved by just 2.6 percentage points, from 71.3% in 2023 to 73.9%.

The fund’s own history shows why one good year moves the ratio so little. CalPERS was overfunded at 111.9% in 2001, fell through the 2000s, and has stayed between 68% and 76% in every year since 2015, regardless of investment performance. Strong return years like 2021 (up 21.3%) and 2024 (up 9.3%) push the ratio toward the top of that band; weak ones like 2022 (down 6.1%) push it back. Investment returns alone have not closed the gap, and at current contribution and benefit levels they are unlikely to.

When the funded ratio stalls, employer contribution rates rise, and the employers here are the County of Santa Barbara, its cities, and its special districts. Pension contributions compete with staffing, road maintenance, and housing programs inside the same budgets, so the distance between 73.9% and full funding shows up as a recurring line item in each of those budgets.

The California State Teachers’ Retirement System (CalSTRS) reduced its unfunded liability from $106 billion in 2020 to $67 billion in 2024, a 37% reduction in four years. Its funded ratio climbed from 71.8% to 83.5% over the same span, passing CalPERS and closing in on the University of California’s system, the best funded of the four plans the Outlook tracks at 84.9%.

The improvement held through a full market cycle. The four-year window includes both the exceptional 27.2% return of 2021 and the negative 2022 (down 1.3%) that followed, and the funded ratio came out 11.7 percentage points higher across the full span. Scheduled contribution increases enacted under the state’s 2014 funding plan have done much of the work, arriving every year regardless of what markets did.

A system moving toward full funding reduces the odds of another contribution climb like the one districts absorbed under the state’s 2014 funding plan, which raised the school employer rate from 8.25% of payroll in 2014 to 19.1% by 2021.

In 2004, CalPERS held 62% of its portfolio in publicly traded stocks, 26% in bonds, and less than 5% in private equity, ownership stakes in companies that do not trade on public exchanges. By 2024 the stock allocation had fallen to 37%, while private equity had grown to 17% and real estate to 12%. Roughly three of every ten CalPERS dollars now sit in assets with no daily market price.

The shift mirrors a two-decade trend among large public pensions seeking higher returns and smoother reported performance than public markets offer. Private assets are valued by appraisal rather than by trading, so their reported values move more slowly and more gently than stock prices, in both directions.

That smoothness cuts two ways for anyone reading the funded ratios above. It damps the reported losses in bad years and delays the recognition of gains in good ones, which means a funded ratio built on appraised values carries more uncertainty than the single decimal suggests. The number is an estimate resting on other estimates, and the share of the portfolio that works that way, private equity and real estate combined, has grown from 12% to 29% in twenty years.

Crude oil production in federal waters off the West Coast, nearly all of it from the platforms in and around the Santa Barbara Channel, averaged 365,000 barrels a month in 2025. Output has now risen three years running, from a low of 224,000 barrels a month in 2022, a cumulative gain of 63%. The monthly data show a distinct step in mid-2025: output from June onward averaged 386,000 barrels a month, against 337,000 over the five months before, and early 2026 has run higher still. March and April of 2026 came in at 580,000 and 561,000 barrels, the highest monthly readings since May 2016.

The step-up coincides with the restart of the Santa Ynez Unit, the offshore complex idled after the 2015 Refugio pipeline spill, whose platforms resumed production in 2025 under new ownership. The recovery remains partial: even after three years of gains, 2025 output ran at just over a third of the 954,000 barrels a month the district averaged in 2015, the last year before the shutdown took full effect.

For the county, offshore production carries fiscal and employment weight beyond its size: property taxes on platforms and processing facilities, royalty flows, and a cluster of specialized jobs. A production base that is growing again is a different planning input than the terminal decline the county had penciled in for a decade.

Statewide crude oil production averaged 7.8 million barrels a month in 2025, down 14.5% from 9.2 million in 2024. A decade ago California produced 16.8 million barrels a month; output has fallen by more than half since, a steady structural decline driven by aging fields, limited new drilling, and a regulatory environment pointed at phase-out. Early 2026 shows the slide continuing at a gentler grade, with monthly declines running 7% to 10% below year-earlier levels.

The statewide backdrop is what makes the offshore gains described above unusual. Federal offshore output off Santa Barbara is rising inside a state where production has fallen every year for a decade. The two series answer to different owners, regulators, and economics: the platforms sit in federal waters beyond state jurisdiction, so the restart proceeded on federal permits even as onshore California production kept contracting.

Refiners, fuel distributors, and energy-exposed businesses in the county read the state series as the supply side of a familiar squeeze: California produces less of its own crude each year while remaining a fuel island with limited pipeline connections, importing the difference by tanker. Local offshore growth changes that arithmetic only at the margin.

West Texas Intermediate (WTI), the benchmark price for U.S. crude, averaged $65.46 a barrel in 2025, the lowest annual average since 2020. The year was a steady decline, from $75.74 in January to $57.97 in December. The market then reversed sharply: $91 in March 2026, $100 in April, $102 in May, before easing to $86 in June, a level still 25% above the same month a year earlier.

Prices this volatile change the economics of every barrel produced off the county’s coast. The offshore restart described above returned to service during the weakest price year since the pandemic, just before prices climbed 76% between December 2025 and May 2026. Operators, royalty recipients, and the county’s property-tax base all experience that swing directly.

The forecast-relevant caution for county and city budgeting is that crude oil prices are neither locally driven nor dependable. Crude prices are set globally, and a series that traveled from $58 to $102 and back to $86 within seven months is a warning against extrapolating any single reading, in either direction, into county revenue projections.

Santa Barbara County’s total crop value reached $2.24 billion in 2025, up 11.5% from $2.01 billion in 2024 and the third record in four years, after 2022 and 2024. The 2025 gain was the largest one-year percentage increase since 2020. In nominal terms the county’s crop value has roughly tripled since 2000, when it stood at $735 million, though part of that longer arc reflects inflation rather than volume.

The gains behind the record yield were uneven. Strawberries remain the county’s dominant crop by a wide margin, and vegetable acreage rebounded sharply in 2025 after touching a quarter-century low in 2024. Wine grapes, the county’s most visible crop, recovered 24% from their weakest year since 2003 but remain well below their earlier peaks, a reminder that the headline record is carried by the berry and vegetable complex rather than by every commodity.

Agriculture’s fiscal and employment footprint makes the record more than a trade statistic. Crop values flow through to farm employment, input suppliers, trucking, and cooling infrastructure across the Santa Maria and Lompoc valleys, where agriculture remains the economic base in a way South Coast readers can underestimate.

Wineries in the tri-county (Santa Barbara, San Luis Obispo, and Ventura counties) processed 162,000 tons of wine grapes in 2025. Cabernet Sauvignon alone accounted for 40% of the crush at a weighted average price of $1,588 a ton. Pinot Noir brought $2,389 a ton and Syrah $2,798, premiums of 50% and 76% over the district’s volume leader.

The split describes two different wine economies sharing one crush district. The Cabernet volume is concentrated in the Paso Robles area of San Luis Obispo County, a scale business built on quantity at moderate prices. Santa Barbara County’s signature varieties, Pinot Noir and Syrah from the county’s cool-climate valleys along with Chardonnay, the largest white at 15% of the crush, compete on price per ton rather than tonnage.

For the county’s wine and hospitality businesses, the premium is the business model. Selling less fruit for more per ton supports the tasting-room and wine-tourism economy that distinguishes the Santa Ynez and Santa Rita Hills appellations from volume wine country, and it is why a district table dominated by another county’s grape still matters to this one.

As of June 2026, the U.S. Drought Monitor placed 0% of California in severe drought or worse, the seventh consecutive month the state has been clear of its two harshest drought categories. As recently as February 2025, severe drought covered nearly 30% of the state; in 2021 the most extreme categories covered most of it. Conditions at the milder end of the scale are slipping, though: the share of California with no drought designation at all fell from 82% in March 2026 to 40% in June, as dry conditions spread through the spring.

The drought measure is statewide rather than county-specific, but its relevance to the previous two findings is direct. The county’s record crop years in 2024 and 2025 followed three consecutive years of above-average rainfall, and the water conditions that made those years possible are the same ones now beginning to dry out at the edges.

For growers and water planners, the June reading is a watch item rather than an alarm. California’s drought cycles turn quickly, and a state that went from nearly one-third severe drought to fully clear in under a year can reverse just as fast.