Bank of A. Levy Posts First-Ever Quarterly Loss

The venerable Bank of A. Levy reported its first-ever quarterly loss Friday, another indication that the Ventura County economy is still struggling.

The county’s oldest bank blamed the loss on bad loans, a stagnant real estate market and the need to set aside reserves in case more loans go sour.

A. Levy reported a $2.3-million second-quarter loss, and a $640,000 loss for the first half of the year. That contrasts with a profit of $2.7 million during the first half of 1991.

“As a local community bank, we are reflecting the market out there,” Executive Vice President Mary Levinson said. “The financial strength of the bank is intact.”

Earnings of $1.2 million in the second quarter were more than offset by losses in bank-owned real estate and the $1.9 million set aside for future defaults, Levinson said.

Many of the bank’s losses were concentrated in commercial real estate, which has suffered high vacancy rates and sluggish growth in the past two years, she said. Many of the bad loans were made to developers in the late 1980s, when real estate appeared to be a safe bet.

“When the market is hot, the value of the loan is higher,” Levinson said. “Then you re-evaluate the property two years later, and guess what--you can’t support (the old value) in today’s market.”

The bank has set aside nearly 2% of the value of its loan portfolio, or $9.6 million, for “poorly performing” loans. In better times, the bank sets aside enough money to cover just 1.25% of its loans.

“We don’t know if we are at the bottom, close to the bottom or coming off the bottom,” Levinson said. “What the market is saying to us is that it is prudent to shore up the reserves.”

Banking and real estate experts said they were not surprised by Levy’s poor second-quarter showing.

“It’s a sign of the times,” said Pam Findley-Flor, president of Findley Reports, a bank rating firm in Anaheim. “A lot of banks are losing money.”

Many Southern California banks have reported losses or drastic reductions in profit in the past two years. Ventura County National Bank, Levy’s Oxnard-based rival, reported a second-quarter profit of only $383,000, down 35% from a year ago.

“What happens with the smaller local banks is their consumer loans are in good shape, but they’ve had trouble with commercial real estate,” said Thad Seligman, senior vice president for Grubb & Ellis brokers in Ventura.

Founded in Point Hueneme 110 years ago, the Bank of A. Levy cultivates a conservative image, advertising itself as “the boring bank.” The family-run bank is a closely held public company with more than $869 million in assets, making it the largest local bank in Ventura County.

Levy recently purchased several foundering savings and loans from Resolution Trust Corp., the federally created corporation responsible for cleaning up the savings and loan crisis.

Findley-Flor said that although the second-quarter loss was substantial, the Bank of A. Levy is a proven performer.

“We are not overly concerned, but we are keeping an eye on them,” she said. “I think they will do pretty well over time. This bank’s been around for a long time.”