Bankers Expect More Losses in 1993 : Earnings: O.C. banks lost $8.6 million in 1st quarter, contrasted with $5.1 million in profits for the same period last year. Observers blame the continued economic slump.

Still reeling through Southern California’s economic slump, Orange County’s community banks lost a combined $8.6 million for the first three months this year, and bankers doubt that the rest of the year will be much better.

The quarterly loss was a big contrast to last year’s first-quarter profit of $5.1 million, but it was an improvement over the October-December period, which saw local banks drop nearly $18 million.

“As long as the economy remains in the same condition, what you see is what you’re going to get for the rest of year,” said Frank E. Smith, chief financial officer of West Coast Bancorp in Newport Beach, which owns Sunwest Bank in Tustin. “I don’t see the economy getting any better.”

Overall, the county’s 29 banks were hurt by their heavy reliance on business loans and commercial real estate loans, said Gerry Findley, a banking consultant in Anaheim.

“There is still bleeding from these bad real estate loans that have to be written off or written down,” Findley said, “and the banks are not able to book many loans of good quality. They can’t find them.”

Those businesses that are highly credit-worthy simply aren’t borrowing much during the bad economy, he said.

During recessions, banks typically are among the last to feel ill effects, but the state’s 400 community banks have been adjusting for more than two years now to try to cope with growing credit problems.

Regulators have criticized lending practices, particularly among the state’s community banks, and have slapped numerous orders on the small banks to get rid of bad loans and to increase capital--investor money and retained earnings that provide the final cushion against losses.

Regulators seized and closed one of Orange County’s banks, American Commerce National Bank in Anaheim, on April 30, though their reasons had more to do with alleged insider abuses and violations of law than with the bank’s financial condition.

Six of Orange County’s 10 largest banks lost money during the first quarter, and only seven banks showed any improvement in earnings over last year’s first quarter.

Some, like Commercial Center Bank in Santa Ana, took bigger losses during the first quarter to cleanse their loan portfolios and reap the benefits of profits later in the year.

Commercial Center, for instance, lost $1.5 million in the first three months, but its second-quarter profit erased the red ink and gave the bank a six-month net income of $260,000, said Alan Holbrook, the bank’s chief administrative officer.

Despite the losses, all but one institution, Mid City Bank in Brea, are well capitalized. Mid City’s basic capital is 4.27% of its assets, which makes it adequately capitalized under federal regulations.

Separately, first-quarter earnings for Orange County’s 10 thrift and loans plunged to $1.8 million from last year’s first-quarter profit of $2.8 million.

Thrift and loans, sometimes called industrial banks, are hybrids of banks and finance companies.

They are often confused with savings and loans, which are also referred to as thrifts.

Orange County Bank Scoreboard

First quarter, 1993, results

Ranked by assets

Assets Delinquent loans (millions) as % of all loans Bank 1993 1992 1993 1992 Commercial Center $363.5 $275.9 0.00% 0.03% National Bank of So. Calif. 346.8 356.4 5.61 4.30 Eldorado 321.6 362.9 1.72 3.28 Security Pacific State 268.0 319.3 2.30 2.09 CommerceBank 262.4 329.2 3.27 5.16 Bank of Newport 244.6 299.1 1.73 3.83 Sunwest 210.7 261.3 3.20 3.28 Landmark 201.0 222.0 0.75 1.26 Orange National 189.8 169.7 3.27 2.21 Pacific National 185.7 183.3 6.12 1.93 Pioneer 185.4 223.3 6.30 6.35 Liberty National 167.8 164.7 6.05 3.02 Pacific Inland 154.9 158.0 7.07 3.92 American Commerce National * 139.1 135.4 10.41 4.71 Colonial N.A. 131.5 131.6 0.38 2.35 Mid City, N.A. 114.2 115.7 14.51 4.87 Frontier, N.A. 112.7 123.1 0.69 1.84 Huntington National 104.9 110.6 2.19 1.91 Marine National 100.0 87.1 1.29 0.74 Corporate 91.1 95.6 1.54 5.08 Mariners 84.3 82.0 1.92 0.02 Grand National 79.2 61.8 0.29 0.73 Bank of Anaheim N.A. 72.7 70.2 0.58 0.36 Monarch Bank 68.4 62.2 2.84 0.97 Bank of Yorba Linda 53.0 54.4 4.98 0.16 Bank of Westminster 52.0 60.7 2.96 6.31 Bank of Orange County 48.9 51.2 3.84 1.57 Dana Niguel N.A. 43.9 52.1 2.83 6.08 United American 33.5 35.9 2.43 0.09 Totals $4,431.6 $4,654.7 3.55% 3.09%

Ranked by assets

Net income (thousands) Bank 1993 1992 Commercial Center $-1,482 $541 National Bank of So. Calif. 131 549 Eldorado -2,270 781 Security Pacific State -3,831 -280 CommerceBank -869 286 Bank of Newport -530 193 Sunwest -1,035 232 Landmark 155 113 Orange National 568 91 Pacific National 41 142 Pioneer -210 390 Liberty National 237 512 Pacific Inland 308 126 American Commerce National * -83 393 Colonial N.A. -20 285 Mid City, N.A. -82 91 Frontier, N.A. -58 108 Huntington National 12 -292 Marine National 29 70 Corporate 151 95 Mariners 137 189 Grand National 212 112 Bank of Anaheim N.A. 115 158 Monarch Bank 54 65 Bank of Yorba Linda -379 46 Bank of Westminster 54 79 Bank of Orange County 47 63 Dana Niguel N.A. 18 1 United American -44 -14 Totals $-8,624 $5,125

Notes: Bad loans should not exceed 3% of total loans, according to bankers and regulators. Net income does not include non-recurring items.

* Regulators seized and closed American Commerce on April 30.

Source: Sheshunoff Information Services Inc., Austin, Texas

O.C. Thrift & Loan Scoreboard

First quarter, 1993, results

Ranked by assets Assets Delinquent loans Net income (millions) as % of all loans (thousands) Thrift 1993 1992 1993 1992 1993 1992 First Fidelity $439.9 $498.0 2.40% 9.11% $ 285 $1,100 Investors 412.8 312.9 2.66 4.04 1,343 911 Citizens 100.9 97.6 4.49 3.16 362 416 South Coast 74.6 81.2 7.89 7.88 -163 -121 First Security 55.6 58.3 2.75 3.35 109 237 Tustin 29.2 29.3 2.96 2.90 60 35 Centennial 15.8 23.0 3.57 7.19 -10 35 Freedom Financial 15.0 21.3 11.66 13.29 -26 53 Franklin 12.6 13.1 1.45 2.09 40 76 Heritage * 1.2 31.5 0.00 1.11 -232 41 Totals $1,157.6 1,166.2 3.24% 6.77 % 1,768 2,783

Notes: Bad loans should not exceed 3% of total loans, according to bankers and regulators. Net income does not include non-recurring items.

* Heritage self-liquidated, closing its doors in March.

Source: Sheshunoff Information Services Inc., Austin, Texas