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California Banks Stop Bleeding Profits

First Republic has been a strong earnings performer, with ROA ranging from 1.31% to 1.57% over the past year, with a net interest margin above 4%.

The bank's shares closed at $30.11 Friday, down 2% year-to-date, following a 5% return during 2011.

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The shares trade for 1.6 times tangible book value and 10 times the consensus 2013 earnings estimate of $2.89 a share, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $2.77.

Bank of America Merrill Lynch analyst Erika Penala on May 23 reiterated her "Buy" rating for First Republic Bank, with a price target of $36, saying the stock offers investors "high quality, superior loan growth and a defensive balance sheet," while forecasting "best in class annual organic loan growth" of "18% in 2012; 17% in 2013; and 12% in 2014."

Interested in more on First Republic Bank? See TheStreet Ratings' report card for this stock.

Strongest California Banks and Thrifts

Based on fourth-quarter financial reports, 11 California institutions were assigned "recommended" ratings of B-plus or above by Weiss Ratings:

The list is sorted by rating, and then alphabetically by institution name.

The largest California institution on Weiss's "recommended list" for California is the privately held Farmers & Merchants Bank of Long Beach, with $4.8 billion in total assets as of March 31. While the bank's nonperforming assets ratio was rather high at 4.53% as of March 31, Farmers & Merchants has been a good earnings performer, with ROA ranging from 1.42% to 1.58% over the past few quarters. The bank is also very strongly capitalized, with a total risk-based capital ratio of 29.00% as of March 31.

The second-largest bank in the state with a rating of B+ or higher from Weiss Ratings, is Farmers & Merchants Bank of Central California, headquartered in Lodi, which is held by Farmer & Merchants Bancorp (FMCB). Weiss rates Farmers & Merchants of Central California an "A-minus (Excellent)," and the bank has stellar asset quality, with very strong capital ratios, and ROA ranging from 0.95% to 1.37% over the past year.

The third-largest California bank with a "recommended" rating from Weiss Ratings is Bank of New York Mellon Trust Co., NA of Los Angeles, which is a relatively small subsidiary of Bank of New York Mellon, with $1.9 billion in total assets as of March 31.

Bank of New York Mellon Trust Co. provides trust services across the United States, and makes an outsized contribution to the parent company, with first-quarter earnings of $34.6 million. The bank's ROA has ranged between is a solid contributor to the parent company's bottom line, with $36.9 million in fourth-quarter net income, with ROA ranging from 7.02% to 9.72% over the past five quarters, and returns on average equity ranging from 8.45% to 12.60%, according to Thomson Reuters Bank Insight.

Interested in more on Bank of New York Mellon? See TheStreet Ratings' report card for this stock.

Thorough Bank Failure Coverage

There has been only one bank failure in California this year.

All 438 previous U.S. bank and thrift closures since the beginning of 2008 are detailed in TheStreet's interactive bank failure map:

The bank failure map is color-coded, with the states having the greatest number of failures highlighted in dark gray, and states with no failures in light green. By moving your mouse over a state you can see its combined 2008-2011 totals. Then click the state to open a detailed map pinpointing the locations and providing additional information for each bank failure.

-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

To follow the writer on Twitter, go to
Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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