Is Your California Bank Financially Safe?

With a sharp decline in asset quality, County Bank took a $14 million net loss in the fourth quarter of 2007, as it made a large provision for loan loss reserves. The $2 billion institution's earnings recovered somewhat in the first quarter, with net income of $3.1 million, but its capital ratios slipped a bit further since it paid out dividends of $2.8 million. County Bank isn't on the above list because its nonperforming assets ratio was 3.04%. Loan-loss reserves covered 68% of nonperforming loans as of March 31.

County Bank and the other California institutions that were below well-capitalized were all considered adequately-capitalized, except for Fremont Investment & Loan, which was undercapitalized, with a leverage ratio of 3.98% and a risk-based capital ratio of 7.11%.

While Fremont Investment & Loan is still open for business, parent holding company Fremont General(FMNTQ Quote - Cramer on FMNTQ - Stock Picks) filed for bankruptcy on June 18, as part of its deal to sell the bank's branches, deposits and some assets to CapitalSource Inc.(CSE Quote - Cramer on CSE - Stock Picks), which is in the midst of organizing CapitalSource Bank.

Security Pacific Bank had the worst asset quality for any California institution, with nonperforming assets, including loans past due 90 days or more and repossessed real estate, comprising 13.47% of total assets as of March 31. This is more than double from the previous quarter. The bank took a net loss of $26.8 million for the first quarter, the same amount it added to loan loss reserves. Reserves covered a very high 4.69% of total loans as of March 31, but covered only 30% of nonperformers. This level of coverage could well be inadequate, since most of the problem assets are residential construction loans.

« Previous Page

1 2 3 4 5

Next Page »