O.C. Community Banks See Profits Plummet : Earnings: Losses at Far Western Bank in Tustin are largely to blame. Meanwhile, thrift and loans post slightly improved performance.
The combined profits at Orange County’s 38 community banks plunged 34% for the first nine months last year, largely as a result of losses at the now-defunct Far Western Bank in Tustin.
County-based banks reported combined net income of $27.7 million for the first nine months, compared to $41.9 million in earnings for the same period in 1989, according to Sept. 30 regulatory figures compiled by Sheshunoff Information Services Inc. in Austin, Tex.
The local banks posted $5.6 million in profits for the third quarter, again dragged down by Far Western. The Tustin bank lost $9.8 million in the third quarter and $13.1 million during the nine-month period before regulators seized and closed it Dec. 14.
Without Far Western--the only county bank to be seized in three years--the local industry’s earnings were flat as cautious bankers shunned risky loans in the face of a softening economy and tighter regulations.
Meanwhile, the county’s 14 small thrift and loans posted slightly higher profits than they did the previous year, earning $3 million for the third quarter and $11 million for the first nine months.
Thrift and loans are often confused with savings and loans, which usually are referred to as thrifts also. Thrift and loans are hybrids of banks and finance companies, and banking regulators oversee their operations. Deposits also are federally insured.
“The independent banking industry in California and in Orange County is in good shape,” said Gerry Findley of Brea, a statewide banking consultant. “What we’re going to see when it all shakes down is that profits won’t be as large as last year. But that’s fine, because the banks generally are solid.”
Findley estimates that annual net income will drop about 10% for independent banks statewide. Orange County’s 34 profitable banks over the first nine months posted combined net income of $41.5 million, a shade below the $41.9 million that all county banks earned in the same period in 1989.
Heading the list of profitable institutions for the nine-month period were Security Pacific State Bank in Irvine with a $7.5-million profit, Commercial Center Bank in Santa Ana with $2.9 million and Eldorado Bank in Tustin and CommerceBank in Newport Beach, each with $2.8 million.
Besides Far Western, the other money-losing banks for the first nine months were Mission Valley Bank in San Clemente, Laguna Bank in Laguna Beach and United American Bank in Westminster. They posted small losses of $359,000, $291,000 and $61,000, respectively.
The thrift and loans, as a group, outperformed the banks.
“It was an excellent year for the thrift and loan industry,” said Edward Carpenter, an industry consultant in Santa Ana. “The industry’s profitability increased slightly last year in spite of the recession.”
Led by First Fidelity Thrift & Loan in Irvine, 10 profitable county thrifts generated net income of $12.1 million in the first nine months. First Fidelity--which, with $382.4 million in assets, is larger than any county bank--reported net income of $6.8 million for the January-September period.
The biggest money-loser among the thrifts was Huntington Pacific Thrift & Loan in Huntington Beach, which lost $840,000 in the third quarter, erasing its profits for the first half of 1990 and finishing the nine-month period with a loss of $668,000.
Carpenter said thrifts as well as independent banks are gaining customers as larger banks pull out of the middle-market area, leaving many credit-worthy borrowers with little choice but to go to smaller institutions.
He also said surveys show that consumers are beginning to view thrift and loans much like banks.
ORANGE COUNTY BANK SCOREBOARD
Here’s how the county’s 10 biggest banks fared the first nine months, ending Sept. 30.
Assets Net Income (thousands) Bank (millions) 3rd Quarter Nine Months Security Pacific State $329.9 $4,412 $7,533 National Bank of So. Calif. 329.7 890 2,583 CommerceBank 317.1 981 2,800 Sunwest 287.6 528 1,883 Eldorado 283.5 869 2,828 Bank of Newport 278.7 868 2,165 Commercial Center 250.9 1,735 2,949 Pioneer 201.1 755 1,869 Landmark 183.6 546 1,560 Orange National 167.5 249 478
Source: Sheshunoff Information Services Inc., Austin, Texas ORANGE COUNTY THRIFT & LOAN SCOREBOARD
Here’s how the county’s five thrift and loans fared in the period ended Sept. 30.
Assets Net Income (thousands) S&L; (millions) 3rd Quarter Nine Months First Fidelity $382.4 $1,924 $6,753 Investors 204.3 335 705 Citizens 85.2 211 444 South Coast 69.2 239 841 Assured 68.3 135 469
Source: Sheshunoff Information Services Inc., Austin, Texas
