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Finance Local banks buck loan-loss trend



North Island Credit Union Celebrates

60th Anniversary

Several local banks said 2000 was a great year for them, as their assets and incomes grew while loan losses fell.

San Diego National Bank, Cuyamaca Bank, Community Bancorp and Southwest Community Bank have all reported positive results in recent weeks. So has ITLA Capital Corp., parent company of Imperial Capital Bank.

The decline in nonperforming loans for the local banks is in direct contrast to the nationwide trend, according to a national bank rating agency.

Weiss Ratings Inc. of Palm Beach Gardens, Fla., reported last month that nonperforming loans in the U.S. banking industry grew by 15 percent during the first nine months of last year. That’s a sharp increase from the 2.9 percent increase recorded in 1999, the rating service said.

San Diego National had earnings of $29 million for the year ended Dec. 31, a 29 percent increase more than the previous year, said Robert Horsman, president and CEO.

Its total assets grew to $1.47 billion, a 17 percent increase from the previous year. It had $2.5 million in nonperforming loans, or 0.2 percent of total loans outstanding, he added. That compares to $7.1 million in nonperforming loans in 1999.

Cuyamaca Bank of Santee had 2000 net profits of $240,000 compared with net income of $53,000 for the previous year. Bruce Ives, president and CEO, said assets grew to $67.1 million, an increase of 16 percent more than 1999. At the end of 1999, the bank had $10,000 in nonperforming loans or .03 percent of the $29 million in its loan portfolio. By Dec. 31, 2000 the bank had no nonperforming loans.

“Since the bank’s inception in 1984, it has never achieved this level of profitability, and we’re going to use this as a stepping stone on which to build future success,” Ives said.

The reason local banks have so few nonperforming loans in their portfolios is probably due to the fact they make loans secured by property, Ives said. Unsecured loans, such as credit cards, tend to have a higher default rate because there is no asset securing them that the debtor might not want to lose, he said.

He took over as president of the bank in late 1999.

Community Bancorp of Fallbrook, parent company of Fallbrook National Bank, said its assets grew 60 percent during 2000. The bank’s assets now total $280 million, said Tom Swanson, president and CEO.

Its nonperforming loans declined to $57,000, or 0.02 percent of total loans at the end of last year. At the end of 1999, it had $1.8 million in nonperforming loans, or 1.24 percent of total loans.

Southwest Community Bank of Carlsbad said it had net income of $726,000 in 2000. That compares to a net loss of $493,000 for the bank in 1999. The bank commenced business in 1997.

ITLA Capital of La Jolla reported net income for last year was up 13.6 percent to $18.1 million, compared to $16.2 million for the prior year. The company’s nonperforming assets rose to 1.44 percent of its total loan portfolio compared to 0.8 percent in 1999. This increase primarily represents one commercial property loan that is in the process of disposition, said George Haligowski, president and CEO.

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Bank Notes: North Island Financial Credit Union completed its 60th year in business last year by reaching the milestone of $1 billion in assets. U.S. Bank employees donated a variety of sporting goods to the Chula Vista Boys & Girls Club. The bank also donated banners advertising the San Diego Museum of Art’s 75th anniversary.

Send banking and finance news to Grupe at agrupe@sdbj.com.

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