THE TIMES 100 : THE BOTTOM LINE : California Lenders Post Modest to Excellent Profits

Profits at most California-based banks and thrifts improved last year, as the gap between what lenders charge for their loans and what they pay on customer deposits continued to widen.

Seven of the largest 25 publicly traded banks and thrifts recorded a return on average assets of more than 1%, a figure that is considered a benchmark of excellence in the industry. A year earlier, only one lender was able to achieve that goal.

And in another sign that most of the state’s financial institutions are on the mend, just one of the top 25--Guardian Bancorp of Los Angeles--showed a loss. In 1991, eight were in the red.

“Interest rates dropped throughout most of last year, but not all of those savings were immediately passed through to customers,” said Sally McIver, an analyst with SNL Securities in Charlottesville, Va.

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“Between the drop in rates and all the refinancing that went on, it was a pretty good year for most banks and S&Ls.;”

Small financial institutions generally fared better than larger lenders in 1992, a reversal from the previous year.

Analysts said the switch stemmed largely from the huge write-downs and increased loan-loss reserves that many big lenders were forced to take for troubled real estate loans, especially those for office buildings and other types of commercial property.

Tiny CVB Financial Corp., parent of Chino Valley Bank in Ontario, topped this year’s list by notching a 1.60% return on average assets--meaning it earned $1.60 for every $100 in loans and other assets.

The bank holding company has 16 branches scattered across the San Gabriel Valley, Riverside and San Bernardino. It saved $2 million through layoffs and other cost-cutting measures last year, raising its net income to $9 million.

CVB is known for its conservative loan-underwriting standards, and boasts a loan-loss rate of just 0.15%--about one-tenth of the industry standard.

“We’ve also been helped because our (geographic) area hasn’t suffered as much from the recession as other parts of Southern California,” said Linn Wiley, CVB’s president and chief executive.

Northbay Financial Corp. of Petaluma, the holding company for Northbay Savings Bank, finished second in return on assets by averaging 1.38%. With only seven branches and $267 million in assets, it was also the smallest lender on the list.

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Golden West Financial Corp., parent of World Savings & Loan, fared best among the big lenders with assets of more than $25 billion. Its 1.02% return was enough to make it the most successful lender in 1991, but it fell to No. 5 in the latest survey despite improving its return to 1.11%.

BankAmerica Corp., the state’s biggest bank, turned in a respectable 1.08% return with the help of the cost-savings it enjoyed from its merger with Security Pacific.

The average return at H.F. Ahmanson & Co., parent of Home Savings of America, dropped to 0.39% from 0.50% a year earlier. The company sharply raised its loan-loss reserves last year because of the state’s slumping real estate market.

Great Western Financial’s return plunged to 0.15% from 0.75% a year earlier. It ended the year with a fourth-quarter loss after it, too, raised its loan-loss reserves dramatically.

The only company to show a negative return was Los Angeles-based Guardian Bancorp, with a modest loss of 0.22% on average assets.

Guardian, which specializes in business loans and has only three offices, boosted its reserves for loan-losses in the fourth quarter of last year and suffered a $1.8-million loss for all of 1992.

Top 25 Banks and S&Ls;

Ranked by income as a percent of average assets.

% return on average 1992 income 1992 assets Rank Company assets ($ millions) ($ billions) 1 CVB Financial 1.60 9.0 0.564 2 Northbay Financial 1.38 3.7 0.267 3 First Republic Bancorp 1.26 11.8 0.932 4 Downey Savings & Loan Assn. 1.22 41.9 3.443 5 Golden West Financial Corp. 1.11 283.5 25.465 6 BankAmerica, Corp. 1.08 1,492.0 138.617 7 Westamerica Bancorporation 1.03 14.0 1.352 8 Redwood Empire Bank 0.91 2.6 0.288 9 Metrobank 0.65 5.8 0.889 10 Union Bank 0.59 102.6 17.457 11 First Interstate Bancorp 0.58 282.3 49.042 12 Wells Fargo & Co. 0.53 283.0 53.046 13 FirstFed Financial Corp. 0.51 18.0 3.510 14 El Dorado Bancorp 0.50 2.8 0.550 15 H.F. Ahmanson & Co. 0.39 156.4 40.459 16 Bay View Capital 0.38 9.9 2.597 17 SFFed Corp. 0.38 12.6 3.300 18 Imperial Bancorp 0.34 11.6 3.445 19 Napa Valley Bancorp 0.26 1.6 0.600 20 Pacific Western Bancshares 0.25 2.8 1.096 21 Coast Savings Financial 0.20 16.5 8.381 22 Great Western Financial 0.15 53.9 35.903 23 Westcorp Inc. 0.09 2.3 2.513 24 Citadel Holding Corp. 0.04 2.0 4.788 25 Guardian Bancorp -0.22 -1.8 0.815

Source: STAR Services.

Data from California Bankers Assn. and California League of Savings Institutions.