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Wednesday, Feb 28, 2024

Big Picture for Banks Is Good, According to FDIC Report

Any doubt that the banking industry is doing better will be dismissed when reading the latest report from the industry’s top regulator, the Federal Deposit Insurance Corp.

In a missive released last month, the FDIC, the agency that insures deposits at 7,181 U.S. commercial banks, reported those entities turned an aggregate net profit of $37.6 billion for the third quarter, up $2.3 billion from the net profit it made in the third quarter of 2011.

It was the 13th consecutive quarter that the banks’ earnings were improved on a year-over-year basis.

In California, a report from the state’s Department of Financial Institutions, which oversees 171 state chartered banks, mirrored the same high performance that was evident on a national scale.

For the first nine months of 2012, the state banks reported net income of $2.3 billion, up from $1.7 billion for the like nine months of 2011. Assets for the state chartered banks went from $259 billion to $274 billion, up $15 billion or nearly 6 percent from the third quarter of 2011, the report stated.

The situation for San Diego community banks may not be as robust as the entire industry because most lenders aren’t growing their loan portfolios much.

Yet, an evaluation by the San Diego Business Journal of 20 institutions with local headquarters as of June 30 showed each lender except for two making profits.

The community banks that remain here are mostly doing well, but — with the consolidation trend continuing — how many will still be around by the end of 2013 is a question that only time will answer.

• • •

Local Merger Not Causing Much Action: Hard to discern what the story is with the merger of Coronado First Bank and San Diego Private Bank as management of each of the banks decided that the less said about it the better.

But a look at the share price of Coronado First (technically the acquiring entity) doesn’t shed much light either on the deal. Since the agreement was announced in November, shares in the bank, traded under NADO on the Over the Counter Bulletin Board, have barely budged.

Two days after the deal was announced, shares jumped up from $9.50 to $10.25, with about 6,000 shares changing hands. But then it dropped back down to $9.40, the price where it stood most recently as of Dec. 19. Most days there isn’t any trading.

In most mergers, the stock of the acquiring company declines while the stock in the selling company rises, but this one is so small (both banks are under $200 million in assets), it’s not on most people’s radar.

Indeed, the folks at SDPB take the “private” part of their name quite seriously. Chairman Selwyn Isakow declined to reveal even how many shareholders the bank has; sources said it’s less than 100.

CFB has about 450 shareholders, with the equity groups that belonged to Embarcadero Bank being the majority holders. The stock has consistently traded below the $10.55 book value as of the end of 2011, but then again, most banks are in that boat.

Maria Kunac, who heads up CFB and is the designated CEO for the new bank, said the proxy report on the merger will be out in January. The merger requires the approval of both banks’ shareholders and regulators.

If completed, the merged bank would have about $300 million in assets, which would rank it sixth among the shrinking list of locally based banks.

• • •

Escondido Bank Does Better Than Most: Escondido-based California Community Bank finally consummated its sale to Grandpoint Capital, the Los Angeles bank holding company that merged it into Regents Bank as of Nov. 30. The sale was first announced in January.

Grandpoint paid CCB shareholders $14.17 per share for the four-office bank or an aggregate of $30.8 million. That’s about $800,000 more than the estimate that was first announced. The additional money may assuage some of the separation pain by a few of the bank’s top executives having to move on. CEO Larry Hartwig takes on a part-time consulting role that will take him at least through the end of March. He’ll also get a seat on the board of Regents Bank. CFO Bob Lampert was also retained in an advisory capacity.

Bob Marshall, CCB’s chief credit officer, moves over to take the same position at the Bank of Southern California.

Mark Anderson, CCB’s executive vice president and operations manager, assumes the role of chief operations officer at Regents.

CCB’s four offices will remain open under the Regents name, maintaining the same hours; phone numbers won’t change.

On Feb. 3, the banks merge the banks’ computer systems. Affected customers will be given guidance concerning how these changes will affect their accounts, Regents said.

• • •

Small Change: Bexil Corp., a mortgage lender with offices here and New York and led by longtime mortgage veteran John Robbins, said it’s buying a 90 percent equity stake in a small, unnamed mortgage bank, with the option to acquire the other 10 percent in the future … Wells Fargo Bank closed its Solana Beach Lomas Santa Fe office Dec. 28, leaving Wells with 104 branches in the county, the most of any bank.

Send any news about locally based financial institutions to Mike Allen via email at mallen@sdbj.com. He can be reached at 858-277-6359.


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