Is Your California Bank Financially Safe?

The good news is that on June 16, the holding company announced a merger agreement for PFF to be acquired by FBOP Corporation, the holding company of California National Bank of Los Angeles.

Largest Banks

Here's a list of California's 10 largest banks and S&Ls. All were well capitalized as of March 31:

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While one would normally think of Wells Fargo(WFC Quote) as the largest bank based in California, its largest charter, Wells Fargo Bank, NA, is headquartered in Sioux Falls, S.D.

Bank of the West (held by BNP Paribas(BNPQY Quote)) is the largest depository institution actually chartered in California, with $62 billion as of March 31. While the institution's earnings have hit a bump over the last two quarters with higher provisions for loan loss reserves, loan quality has held up pretty well, with a nonperforming assets ratio of 0.73% as of March 31, and reserves covering 117% of problem loans.

Union Bank of California (a unit of Mitsubishi UFJ Financial Group(MTU Quote)) has maintained strong loan quality, with limited chargeoffs. Nonperforming assets comprised just 0.28% of total assets as of March 31, excellent for an active lender in this environment.

The bank's earnings have weakened of late, with net income of $103 million for the first quarter, or a return on average assets of 0.73% and return on average equity of 8.86%. In comparison, these returns were 0.99% and 11.70% for 2007 and 1.48% and 15.88% for 2006. We will also be watching the risk-based capital ratio, which was down to 10.22% as of March 31. Of course, the holding company has very deep pockets.