THE TIMES 100 / THE BEST PERFORMING COMPANIES IN AMERICA : THE BOTTOM LINE : Survival of the Fittest : Banks That Made It Through Recession Are Stronger
Consolidation and failures during the past decade may have radically reduced the number of California’s banks and savings and loans, but those that remain are generally healthy--and getting stronger.
It’s a measure of how deep a hole the state’s financial services industry was in that only one California-based financial institution, CVB Financial of Ontario, appears on The Times 100 list of most profitable companies, a ranking that charts average two-year return on shareholder equity.
That dearth does not diminish the accomplishment of the state’s surviving banks and thrifts--many of them small--that have bounced back from recession to carve out roles in the rapidly changing financial services industry.
For example, CVB Financial, parent of 16-branch Chino Valley Bank, has found a niche in the booming agribusiness market. The commercial bank is a lender to many of the 350 dairies in its market area, Chief Executive Linn Wiley said. For the second year in a row, CVB heads the list of the top-performing California banks and thrifts.
Fast-growing GBC Bancorp, parent of General Bank of Los Angeles, which caters to the Chinese business community, has earned a “super premier” grade from the Findley Reports rating company. GBC ranks No. 3 on this year’s list of most profitable banks and savings and loans in the state, according to data compiled for The Times by Star Services, a San Francisco business research company.
The larger institutions that prospered did so by bringing their problem-loan portfolios under control. In the past few years, the earnings of many of these companies have been pummeled by the need to set aside huge sums for bad loans.
Drastic action was usually required to achieve that end. Thrifts such as H.F. Ahmanson, California Federal Bank and Great Western Financial sold hundreds of millions of dollars’ worth of non-performing assets to clean up their balance sheets.
First Interstate Bank, the top-performing big bank on this year’s list, got high marks from investors for boosting its dividend and buying back its stock, which pushed up its share price.
First Interstate’s profit was boosted by improved efficiency and a decreasing cost of funds. The bank benefits greatly from its high number of low-interest-bearing checking accounts, said Campbell Chaney, an analyst with Dakin Securities of San Francisco.
Banks generally did better throughout the state. State-chartered commercial banks reported aggregate profits in 1993 of nearly $2.8 billion, up 43% from 1992, according to a survey by Sheshunoff Information Services of Austin, Tex.
As consolidations continued, the number of state-chartered banks shrank to 252 at the end of 1993, from 260 a year earlier, said Stan Cardenas, chief deputy superintendent of the California Banking Department. The state’s banks once numbered more than 400.
Cardenas said 1993 ended on a “hopeful note. We saw upgrades in ratings of individual banks. . . . Larger banks showed improved earnings, and we saw renewed interest by investors in either buying banks or investing new capital in problem banks.”
The state’s thrifts reported a decline in aggregate profit to $504 million, off 19% from the $620 million reported in 1992, according to the California League of Savings Institutions. That was largely the result of loan losses that typically accompanied the large thrifts’ bulk sales of bad assets. Total thrifts also shrank to 96 as of December, down from 104 a year previous.
Top 25 Banks and S&Ls;
Ranked by income as a percent of average assets.
% return on average 1993 income 1993 assets Rank Company assets ($ millions) ($ billions) 1 CVB Financial 1.50 9.5 0.636 2 First Interstate Bancorp 1.47 736.7 50.090 3 GBC Bancorp 1.29 11.9 0.929 4 Downey Savings & Loan 1.25 43.7 3.486 5 TriCo Bancshares 1.24 6.3 0.512 6 ValliCorp Holdings 1.20 6.1 0.510 7 Northbay Financial 1.20 3.8 0.318 8 Wells Fargo & Co. 1.19 612.0 51.579 9 New Horizons Savings & Loan 1.17 3.3 0.280 10 Redwood Empire Bancorp 1.13 4.6 0.403 11 Sierra Tahoe Bancorp 1.12 2.6 0.231 12 Foothill Independent Banc 1.12 3.2 0.281 13 University National Bank 1.09 4.2 0.388 14 BankAmerica Corp. 1.04 1,954.0 187.109 15 Golden West Financial 0.96 273.9 28.433 16 First Republic Bancorp 0.93 12.4 1.341 17 SDNB Financial Corp 0.91 1.2 0.130 18 Cathay Bancorp 0.90 7.8 0.866 19 California Bancshares 0.89 7.7 0.860 20 Home Federal Financial Co. 0.89 6.0 0.680 21 California Financial Hold 0.85 9.4 1.100 22 CU Bancorp 0.71 2.1 0.297 23 Palm Springs Savings Bank 0.67 1.1 0.160 24 CENFED Financial 0.66 8.6 1.309 25 Landmark Bancorp 0.65 1.4 0.211
Source: STAR Services.
Data from California Bankers Assn. and California League of Savings Institutions.
