Rancho Santa Fe National Loses $942,000 in 1st Quarter

Stung by regulators’ insistence that it set aside $1.6 million in loan-loss provisions to protect against growing softness in the Southern California real estate market, Rancho Santa Fe National Bank reported a $942,000 first-quarter loss.

The provisions were mandated by the federal Office of the Comptroller of Currency after a regular audit of the bank’s loans, bank President James A. Boyce said Thursday. The 30 to 35 questionable loans singled out by the examiners are mainly construction and manufacturing loans secured by single-family residences, he said.

Three of the problem loans, totaling between $2.5 million and $3 million, were made for the construction of speculative, unsold single-family residences, Boyce said. The auditors told the bank that scrutiny of the bank’s loans was intensified by the office’s “concern for Southern California real estate.”

Acknowledging that borrowers were not paying on some of the loans in question, Boyce said the additional provisions stemmed from the regulators’ view that the value of the loans’ collateral was less than the bank’s appraisal.

For the same quarter last year, the three-branch bank, with $159 million in assets, reported a $393,000 profit. For all of fiscal 1990, the bank’s profit was $1.4 million.

Boyce said the bank plans no special cost-cutting measures in response to the loss and that the bank’s tangible capital of $9.9 million, or 8.4% of assets, is still strong.

The bank’s nonperforming loans as of March 31 were about $3 million, or 4% of total assets.

Rancho Santa Fe National Bank has been involved in merger discussions with several financial institutions over the years, including Citizens Holdings of Costa Mesa, First National Bank of San Diego and Grossmont Bank of La Mesa. For a variety of reasons, the mergers have never reached fruition.