Lemonade Stands on Wane : Mission Viejo National Closes Loan Offices; Slump Is Blamed

Mission Viejo National Bank, the once-troubled bank that made a dramatic turnaround by relying on its mortgage operations, has closed four loan offices from Torrance to San Diego as last spring’s rise in interest rates continues to cause a slump in refinancings and new mortgages.

Also on the wane are the lemonade stands that the bank has put up on Sundays near new housing developments to attract home buyers in need of mortgages. The stands will be an “off and on” operation through Labor Day, when the promotion is expected to end, a bank official said.

But the bank is shifting its focus to commercial lending and government securities while still attempting to serve its far-flung mortgage operations through toll-free telephone lines, according to Jack Barnes, president of the bank and its holding company, Viejo Bancorp.

The internal shake-up comes after the bank and its parent company posted a record $1.7-million net income in the first six months of this year, compared with a $138,000 net income in the same period last year. The second-quarter net income rose to $641,000 from the $78,000 earned in last year’s second quarter.

The six-month profit already has outpaced the record $1.4 million the company earned for all of last year and a turnaround from 1985 when the institution was the second-worst-performing bank in Orange County with a $1.9-million annual loss.

The company’s total assets climbed to $60.5 million at the end of June, from $36.8 million a year earlier.

Though the bank has ended the monthly leases for its loan offices in Brea, Torrance, Riverside and San Diego, it is continuing to service those areas through a field sales force and toll-free 800 numbers.

“We were too strung out, and it was hard to manage,” Barnes said. With fewer mortgages, especially refinancings, the bank brought in its managers of the four loan offices to operate out of headquarters in Mission Viejo.

The bank also had increased its commercial lending to $12 million at the end of June from $7 million a year earlier, Barnes said. Total loans fell slightly to $28 million at the end of the period, from $29.1 million a year ago.

In an effort to take up the slack in the loan business, Barnes increased the bank’s portfolio of government securities to $24.1 million by the end of June, from only $2.1 million a year earlier.