BANKING / FINANCE
Troubling Designation: Mission Valley Bank in San Clemente has garnered a dubious distinction.
It has been listed for the second straight year on USA Today’s roster of the nation’s most troubled banks, one of 464 institutions that fail to have enough capital and reserves to cover bad loans and other problem assets, according to the newspaper’s Wednesday edition.
The tiny bank is the only Orange County bank on the list, but Heritage Thrift & Loan in Brea and First Fidelity Thrift & Loan in Irvine joined the federally insured banking institutions on the list this year. A thrift and loan is a hybrid between a bank and a finance company, and its deposits are insured by the Federal Deposit Insurance Corp., which also insures bank deposits.
Mission Valley’s troubled assets were more than double--220%--its combined capital and reserves at the end of the year, the newspaper reported. With $45.1 million in assets at the end of December, the bank lost $1.2 million last year.
Heritage’s problem assets were 113% of its capital and reserves at the end of December, and First Fidelity’s bad assets were 118% of its capital and reserves. Nevertheless, First Fidelity, with $397.9 million in assets, earned $8.5 million last year. Heritage, with $49.4 million in assets, lost $311,000.
Jack Barnes, Mission Valley’s president, was not available for comment.
William Mylymok, president of Heritage’s parent firm, West Coast Bancorp in Orange, said the thrift’s bad assets were being flushed out as it changed over its loan portfolio from automobile loans to secured lending like home equity loans. Jeffrey Rippee, First Fidelity’s president, said loans may be delinquent but typically are collected. Of $750 million loaned out in the past five years, he said, the thrift has charged off only $300,000.
The newspaper cautioned that making the list of most troubled banks did not mean that failure would necessarily follow. But 158 of the 169 banks that failed or received government assistance last year were on USA Today’s list a year ago.
