Austerity Moves Pay Off for El Camino Bancorp

Two years of retrenching and consolidating operations paid off for Anaheim’s El Camino Bancorp and its El Camino Bank subsidiary in 1984 with a near-quadrupling of profits, the banking company’s top officers said Wednesday.

El Camino, which began scrambling in 1983 to recover from a spate of real estate loan losses, posted a consolidated 1984 profit of $825,000, up 291% from the $211,000 in earnings reported for 1983. El Camino Bank is the holding company’s primary asset and accounted for virtually all of the earnings.

For the fourth quarter, which ended Dec. 31, El Camino earned $177,000, a 510% increase from the $29,000 in profits posted for the final period in 1983.

At the same time the banking company’s profits were soaring, El Camino cut its assets to $88 million from $95.8 million in 1983 in an effort to weed out bad loans and improve the bank’s earning capacity. Stanley Pawlowski, chairman and chief executive of the holding company, said he believes El Camino now is poised to increase its assets to the $100-million level.

The banking company lost $897,000 in 1982 because of loan losses, but Pawlowski said Wednesday that he believes the loan problems were cured during 1984.

In addition, he said, the bank and the holding company kept a lid on expenses by freezing hiring and cutting back on advertising and other discretionary expenses. El Camino’s annual payroll has held steady at about $2 million for the past three years while the total number of employees has shrunk from 140 to 110, said bank President William McDermott.

McDermott said Wednesday that the real estate holdings that El Camino Bank obtained through foreclosure totaled $1.2 million on Dec. 31, down from $1.7 million in 1983 and from $2.9 million in 1982.

As a further sign of recovery, the bank was able to cut its reserve for loan losses to $775,000 from $1.2 million at the end of 1983.

And shareholder equity, bolstered by 1984 earnings, rose 11.5% to $6.8 million from the $6.1 million reported on Dec. 31, 1983.

El Camino Bank’s ratio of capital to assets stood at 8.04% at the end of 1984, McDermott said, well above the 7% minimum required for most independent banks by the state Banking Department and the Federal Deposit Insurance Corp.

McDermott said that the bank shrunk its loan portfolio to $53.6 million at the end of 1984, down from $59.6 million in 1983, with most of the decline in the bank’s commercial loans.

“We had gotten a little top heavy in commercial lending,” he said. “So now we are getting a little more into consumer lending, because we are being pushed by the public to do more consumer-type banking.”

El Camino’s consumer loan portfolio increased by 35.6% to $11.8 million in 1984, up from $8.7 million in the previous year.