Earnings of Community Banks, S&Ls; Improve
Orange County’s community banks continued to improve in the first three months this year, posting combined earnings of $5.7 million, while the county’s savings and loans, led by statewide giant American Savings Bank, recorded combined profit of $65.2 million.
Stable interest rates and the slowly improving regional economy helped the county’s 19 banks and seven S&Ls; report higher profits over last year’s first quarter.
For the record:
12:00 a.m. July 18, 1996 For the Record
Los Angeles Times Thursday July 18, 1996 Orange County Edition Business Part D Page 2 Financial Desk 2 inches; 45 words Type of Material: Correction
Pacific National Bank--The Newport Beach bank said that, under generally accepted accounting principles, it recorded net income of $699,000 for the first three months this year. Under a different set of accounting rules used by regulators, the bank showed a first-quarter loss, which was reported in Tuesday’s edition.
Last year, the locally based banks earned $4.9 million and the S&Ls; earned $44.8 million, according to regulatory figures compiled by Sheshunoff Information Services Inc. in Austin, Texas.
“Bank earnings also reflect the historic low interest rates on deposits,” giving banks with high loan rates a “very high” profit margin, said industry consultant Edward J. Carpenter of Carpenter & Associates in Irvine.
The rebound in the California economy, he said, is creating an “upsurge” in commercial and industrial loans, an indication that business is borrowing more for improvements and expansion.
S&Ls; also are having better than average years, he said, though their focus on home lending means they could see mortgages tailing off a bit if interest rates rise.
“Most S&Ls; appear to be diversifying into the banking industry,” Carpenter said. “Their long-term plans are to be banks with a specialty in home lending.”
Eldorado Bank in Tustin, the county’s third largest community bank with $395 million in loans and other assets, posted the highest profit--$1.4 million. Following it were Southern California Bank in Anaheim with $808,000, Landmark Bank in La Habra with $775,000 and First Bank & Trust Co. in Irvine with $716,000. Landmark has since merged into California State Bank in West Covina.
Only two banks lost money. Pacific Inland Bank in Anaheim lost $681,000, and Pacific National Bank in Newport Beach lost $127,000.
Unlike the geographically constrained banks, the county’s savings and loans are generally more regional or statewide operations.
Irvine-based American Savings, the nation’s fifth-largest S&L; with $19.8 billion in assets, led the group with first-quarter earnings of $42.6 million. It was followed by Western Financial Savings Bank in Irvine, which earned $11 million, and Downey S&L; in Newport Beach, which earned $10.6 million.
Meantime, the county’s eight thrift and loans, regulated institutions that are a cross between a bank and a finance company, earned nearly $4 million for the first quarter. Thrift and loans--often confused with S&Ls--have; lower overhead because they don’t offer checking account services. They pay higher deposit rates on savings accounts but charge higher rates on loans, which are typically made to riskier borrowers.
Fremont Investment & Loan in Anaheim, formerly Investors Thrift, inched over the $1-billion mark in assets at the end of March and earned $2.6 million for the quarter.
