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San Diego Trust & Savings Reports Strong Capital Base

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TIMES STAFF WRITER

At a time when many of the country’s financial institutions are being skewered by increasingly tough regulatory capital requirements, San Diego Trust & Savings Bank remains well above minimum capital levels, bank officers said Monday.

“The bank is in good shape,” Daniel D. Herde, president and chief executive of San Diego Financial Corp., San Diego Trust’s parent company, told shareholders at their annual meeting Monday at the downtown University Club.

San Diego Trust’s primary capital ratio is at 7%, well above the 3% regulatory minimum that will take effect in 1992, Herde said. The bank’s risk-based capital ratio, the toughest of the federal government’s requirements, sits at 12%, well above the 7.25% regulatory minimum that will be in place during 1992.

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Banking industry analysts Monday suggested that “solid” is a good way to describe San Diego Trust, which recently reported year-end 1990 earnings that rose by 3.5% to $12.9 million, up from $12.5 million a year earlier.

Total assets at year’s end rose by 9.8% to $1.6 billion, and total deposits grew by 10.4% to $1.5 billion. Total loans grew by 7.8% to $807 million.

San Diego Trust, a 48-branch institution, has succeeded by continuing to practice its “conservative ways” during the past year, said Gerry Findley, editor of The Findley Reports, a Brea-based consulting firm that ranks California’s banks.

Findley attributed those conservative practices to the leadership of Tom Sefton, San Diego Trust’s president emeritus, who retired last year after 52 years with the bank. “Tom likes to go home and sleep comfortably each night,” Findley said. “And the way to do that is by being conservative.”

San Diego Trust, nevertheless, has been adjusting to increased competition with several major California banks that recently have bolstered their market share in San Diego County. San Francisco-based Wells Fargo recently acquired Great American Bank’s branches, and Security Pacific has acquired several smaller San Diego-based institutions.

The bank has responded by emphasizing its capital strength. The Findley Reports recently named San Diego Trust as one of its “Premier Performers.” The Holt Advisory, a financial newsletter published by Weiss Research Inc., recently listed San Diego Trust as one of the 50 safest banks in the country, based upon its capital levels, and the safest bank in San Diego County.

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“They’re the largest locally based bank in San Diego County and they’re very conservative,” said Irving Katz, an independent industry analyst in San Diego. “But, while they don’t take chances, they’re also very progressive.”

Katz noted that San Diego Trust, which has built an extensive branch system in San Diego County, was among the first financial institutions to recognize the value that consumers would attach to electronic banking. “And, they advertise well,” Katz said. “They’re the hometown bank going against the interlopers--Wells Fargo, Security Pacific--from out of town.”

Although the bank is capital-rich, it will nonetheless be forced to pay heavier insurance premiums to the Federal Deposit Insurance Corp., the government agency that insures deposits. The FDIC has been raising premiums charged to healthy institutions in order to help cover a rising tide of bank failures.

San Diego Trust, which paid $1 million in premiums in 1989, paid more than $3 million during 1990. While the payments decrease corporate earnings, Herde maintained that “it’s important to have a solid insurance fund.”

San Diego Trust will continue to rely upon its “reputation of lasting through recessions, depressions and money panics,” Katz said. “Great American went to Arizona and lost big, but San Diego Trust didn’t do that. They stayed in San Diego and did well.”

Bank officials Monday held a ribbon-cutting ceremony at the bank’s new branch office in Temecula in Riverside County. The office was the first out-of-county branch to be opened in the bank’s 101-year history.

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