CU Bancorp Posts Modest Profit

CU Bancorp, attempting a recovery from major losses and management turmoil last year, has posted a first-quarter profit of $384,000.

While the modest profit was down 35% from the $595,000 that CU earned in the first quarter of last year, it was a marked improvement from the $5-million loss that the company reported in the fourth quarter of 1992. For all of last year, CU, the Encino-based parent of California United Bank, lost $8.2 million.

The losses were a sudden departure for CU, which had grown rapidly and profitably through the 1980s. The setback led to a management shake-up at the company, in which its longtime president and chief executive, John J. Keating, abruptly quit in June and was succeeded by Stephen G. Carpenter. Five months later, CU’s chief financial officer Robert J. Vecci also resigned.

CU focuses mainly on business clients rather than individuals. But like many other banks, CU found itself in big trouble in the 1990s after having made lots of loans to the real estate market.

CU made many loans to firms that bought office buildings and other commercial structures simply to earn lease income. But as the real estate market soured in recent years and vacancy rates soared, CU and its borrowers got burned.

Now, Carpenter has been building CU’s reserves to cover the loan losses, ridding the bank of its problem loans and cutting overhead costs. He’s also shifting CU’s main thrust away from the real estate market and toward providing financing that companies need simply to operate their businesses.

“It’s a completely different bank than it was a year ago,” Carpenter said.