West Coast Posts 1992 Shortfall of $7 Million : Report: A $4.7-million charge that was part of the holding company’s corporate restructuring was the biggest factor in the loss.

West Coast Bancorp said Friday that a growing amount of foreclosed properties and a corporate reorganization caused it to lose four times as much last year as in 1991.

The holding company for Sunwest Bank in Tustin, Heritage Thrift & Loan in Brea and Sacramento First National Bank posted a 1992 loss of $7 million, or 76 cents a share. That compared to a loss of $1.7 million, or 19 cents a share, for the previous year. Annual revenue dropped 21% to $40.2 million last year from $51 million.

The biggest factor in 1992’s shortfall was a $4.7-million charge that the company took in the fourth quarter for its corporate restructuring, which reduced its parent company’s work force from 14 employees to four.

John B. Joseph, the company’s chairman and chief executive, took over as president of West Coast as well, replacing William J. Mylymok. Mylymok remains as chief operating officer, and the board hasn’t determined yet what other duties he might assume, said Frank E. Smith, the company’s chief financial officer.

The company also wrote off $3.2 million in goodwill, essentially the premium paid to acquire Sunwest in 1985.

In addition, the company decided last fall to liquidate Heritage and expects to complete that task by the end of March. But it had to cover a $1.5-million loss at the thrift and loan.

“There’s nothing we can’t do in one of our banks that we’re doing out of Heritage,” Smith said. “Based on our efforts to cut down on overhead, we just didn’t need the thrift anymore.”

Smith said the liquidation maximized shareholder value because folding Heritage into Sunwest would have required the company to file applications with state and federal regulators, who could have taken as long as a year to reach a decision.

Also, because both Sunwest and Heritage are operating under cease-and-desist orders, the company wasn’t certain that regulators would approve a merger, he said. Only a few workers from what once was a 50-employee Heritage staff will transfer to Sunwest, he said. The thrift and loan had four branches but now operates just one: its main office in Brea.

The strict orders require, among other things, that the bank and the thrift clean out a portfolio of bad loans and real estate taken through foreclosure.

At Sunwest, where regulators are concerned about the quality of assets, the bank reduced its amount of bad loans, partly by increasing the number of foreclosures.

The recession, which has hurt real estate values as well as small companies, helped to cause foreclosures on properties that had outstanding real estate loans as well as properties that were collateral for business loans.

The bank’s bad assets as a percent of total assets rose to 6.77% at the end of December from 4.73% a year earlier. Regulators want that ratio held at or below 3%.

Regulators have lifted a cease-and-desist order on the Sacramento bank, and Smith said the institution is doing well.

For the fourth quarter, West Coast lost $6.9 million, or 75 cents a share, compared to a loss of $1 million, or 11 cents a share, for the final quarter of 1991. Quarterly revenue sank 36% to $7.9 million from $12.3 million. Total assets fell 21% to $361.7 million at the end of December from $458.1 million a year earlier.

A drop in asset size often indicates an effort to shore up capital, the final cushion against losses. But West Coast’s capital is well above the ratios required by regulators, Smith said.

“Demand is down for commercial loans,” Smith explained. “It is tough finding good loans to make.”