39 Banks Post Combined Net of $30 Million

Orange County’s 39 banks posted combined net income of $30 million for the second quarter, an 80% increase over the local banking industry’s earnings of $16.7 million in last year’s second quarter.

All but one of the county’s banks posted profits, and the only money loser, Laguna Bank, recently gained a major investor to help erase its red ink.

Total assets at county banks also grew 12% to $4.1 billion at the end of June from $3.7 billion a year earlier. Sunwest Bank in Tustin became the county’s biggest bank with $262.8 million in assets, but the lead has changed hands often in the past few years and six other banks each have more than $225 million in assets.

The results mark the strongest quarterly performance by local banks in this decade.

But Alex Sheshunoff, head of Sheshunoff Services Inc. in Austin, Tex., which compiled the quarterly results from regulatory statistics, warned that earnings often do not reflect underlying problems such as troubling real estate loans.

One of the indicators of such underlying problems, Sheshunoff said, is the percentage of a bank’s non-performing loans. He said a bank should not have more than 3% of its loans classified as non-performing. Banks try to keep that percentage under 1%.

But non-performing loans have jumped at a number of Orange County banks.

Far Western and Commercial Center banks, the two top money earners in the second quarter with $3.8 million and $2.6 million respectively, also were the two banks with the highest rate of bad loans, with ratios of 10.4% and 12%, respectively. At the end of June 1988, Far Western’s ratio of non-performing loans was 8.4%, and Commercial Center had no bad loans.

ORANGE COUNTY BANKS RANKED BY ASSETS

At June 30, 1989

Non-Performing 2nd Quarter Assets Loans as a % Income Bank (millions) of Gross Loans (thousands) Sunwest $262.8 1.51 $1,540 Eldorado 253.3 2.50 1,809 CommerceBank $239.1 1.39 1,829 Security Pacific State 237.7 0.41 2,595 Bank of Newport 236.6 2.25 699 Commercial Center 233.9 11.99 2,616 National Bank of So. Cal. 228.4 0.68 1,012 Far Western 193.1 10.37 3,786 Landmark 159.9 0.38 958 Orange National 151.4 1.10 759 Pioneer 138.5 1.92 1,422 El Camino 124.0 0.21 1,086 Liberty National 118.4 1.41 678 Citizens Bank of Costa Mesa 114.1 0.68 1,079 Mission Viejo National 108.5 5.92 1,256 Pacific National 90.1 3.60 220 Marine National 85.4 0.45 376 Corporate 84.7 0.05 698 Pacific Inland 83.2 2.53 270 American Commerce 81.4 0.96 939 National Huntington National 79.6 0.06 404 Frontier, N.A. 68.9 1.98 319 California City, N.A. 61.1 1.76 193 American Interstate 60.0 2.83 178 Bank of Westminster 57.7 1.52 286 Mariners, N.A. 55.8 0.87 411 Bank of Anaheim, N.A. 54.1 0.01 258 Monarch 52.2 0.05 60 Dana Niguel, N.A. 52.0 0.33 405 Founders National 45.5 0.79 190 Bank of San Clemente 44.7 0.00 283 Colonial, N.A. 44.3 0.00 561 Bank of Orange Cty 36.4 1.34 150 Mission Valley, N.A. 34.1 9.52 312 United American 32.2 3.02 16 Bank of Yorba Linda 31.8 3.60 173 Grand National 29.0 0.05 100 First American Capital, N.A. 27.1 7.40 246 Laguna, N.A. 20.8 3.65 -121 TOTALS 4,111.8 30,051

* Before extraordinary items. Source: Sheshunoff Information Services Inc.