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Finance Borrego Springs takes 1st quarter hit but plans to spring back



Pacific Community Bank Changes Its Name to Discovery Valley Bank

What was supposed to be a smooth transition on the sale of two bank branches to a credit union was anything but for Borrego Springs Bank last quarter, contributing to the bank’s first quarter loss.

For the quarter ended March 31, Borrego Springs, with $91 million in assets, lost $154,000.

Borrego Springs CFO Michelle Whelehan said the loss was caused by several factors: the start of a new division, fewer SBA loans to sell, and a delay in the sale of two branches that forced the bank to hold onto higher-paying deposits.

The bank originally structured the sale of branches in Calipatria and West Shores to Government Agencies Federal Credit Union last year and expected the deal to close by February.

However, the FDIC did not recognize the deposit insurance for the credit union and forced the bank to restructure the acquisition as a real estate transaction.

Because of the delay, the bank was left with a large number of brokered deposits it attracted to make up for about $15 million in deposits in the branches it was selling. In the end, the bank ultimately will close the branches June 29, and they will be reopened under the credit union’s ownership on the next business day, July 2.

“It’s frustrating when you’re trying to do the right thing for the company and for the community, and you find a way to do it, and the regulators don’t support those efforts,” said Borrego Springs President Frank Riolo.

Borrego Springs launched a new division this quarter aimed at providing cash access services to Indian casinos. The division has three Indian-owned casinos as customers, but expects more business in the future, Whelehan said.

Riolo said BSB, which is 70 percent owned by the Viejas Band of the Kumeyaay Indians, should rebound nicely over the rest of the year.

“We’ll be back significantly in the black this quarter, and for the third and fourth quarters do quite well,” he said.

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Bank Changes Name:

It hasn’t taken a deposit yet, but a San Marcos bank still in organization decided to change its name.

Originally the new bank was to be called Pacific Community Bank, but the organizers were contacted by a Los Angeles-area credit union that objected to using the name.

The local group has changed the name to Discovery Valley Bank.

President Jim Kelley said the name was among those bounced around by the board, and comes from words on the seal for the city of San Marcos, “Valley of Discovery.”

Kelley said the name derives from the first explorers in the area, Spanish explorers who named the area “Vallecitos de San Marcos,” or little valleys of Saint Mark, when they found the area on the feast of Saint Mark.

The bank began raising its capital in an offering of between 760,000 to 900,000 shares priced at $10.

Kelley said he plans to open the bank’s doors in September at a location next to the Quails Inn in Lake San Marcos at 1145 San Marino Drive, Suite 346.


Global Axcess Buys More ATMs:

Global Axcess Corp., a San Diego-based startup that is carving out a market in nonbanking ATM networks, purchased Nationwide Money Services of Ponte Verde, Fla., for an undisclosed price this month.

Nationwide, a subsidiary of Cardservice International, has some 1,000 ATMs and recorded $10 million in revenues last year, the company said.

This is Global Axcess’ third acquisition since its founding last December. The firm, with only six people locally and a total of about 50 employees, took over the shell company of Net Holdings Inc., an OTC traded firm, and only recently resumed trading, going out at 90 cents and rose to 95 cents as of June 20.

The company is in the middle of a private placement for $2 million which should close by the end of the month, said CEO David Fann.

“Our target goal is to reach 4,000 ATMs by the end of this year, and hit 10,000 by the end of 2002,” Fann said.

Fann said revenues by the end of this year are expected to be $32 million.

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RSF National Gets Top Award:

Rancho Santa Fe National Bank, now a part of First Community Bancorp, a holding company of three banks based in Rancho Santa Fe, said it received a super premier performer award from the Findley Reports, a financial services rating firm, based on its 2000 financial results.

The highest award given by Findley takes into account growth in assets, deposits loans, net loan losses, and return on equity.

At the end of 2000, Rancho Santa Fe National had $224.6 million in assets, an increase of 23 percent; net income of $4 million, up 33 percent; a return on assets of 2 percent; and return on equity of 21.14 percent.

For its first quarter, Rancho Santa Fe National had net income of $1.1 million; total assets of $215 million; and total loans of $192 million.

First Community Bancorp acquired First Professional Bank, with $270 million in assets serving the Los Angeles area. Along with its other bank, First Community Bank of the Desert, combined assets for the holding company are about $600 million.


REIT Cancels Deal:

American Residential Investment Trust Inc., a San Diego-based REIT, said it terminated its negotiations to buy a controlling interest in LoanCity.com, a San Jose-based online loan originator. The deal was supposed to close in May.

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County Pool Rated AAA:

The county’s Pooled Money Fund, a $3 billion group of some 2,000 funds set up for local government agencies, was rated AAAF/S1 by Standard & Poor’s last month.

The pool, managed by the county Treasurer Bart Hartman, serves the county, various school districts and community colleges and some cities.

Last year, the pooled fund provided an annualized return of 6.75 percent, said Neil Rossi, chief deputy treasurer.

The fund previously received the highest rating by Fitch, but the county switched rating services because S & P; is more recognizable and does a more in-depth analysis of investments, Rossi said.


SDNB Opens San Ysidro Office:

San Diego National Bank held the grand opening of its newest branch office in San Ysidro.

The 4,356-square-foot office at 640 E. San Ysidro Boulevard has an ATM and night depository. It is San Diego National’s 15th office.

Branch manager Enrique Melgar, who also manages the Chula Vista office, said the entire staff is bilingual.

As of March 31, San Diego National had earnings of $6.8 million; total assets of $1.5 billion; and loans of $1.1 billion.

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Neighborhood National Moves:

Neighborhood National Bank moved its corporate offices from Downtown to 1717 Sweetwater Road in National City. The bank signed a $587,000, five-year lease for nearly 7,000 square feet and plans to consolidate its Paradise Valley branch at the new office. It also has its headquarters office at 3511 National Ave. in National City.

Send any local banking and finance news to mallen@sdbj.com.

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