Regarding the article in the Feb. 7 edition of the
San Diego Business Journal
titled “Banks: Most Local Lenders Are Seeing Loan Portfolios and Net Profits Climb,” the management at Temecula Valley Bank is very proud of the bank’s accomplishments for the year ended Dec. 31, 2004.
Temecula Valley Bank had a return on average equity of 28.74 percent and return on average assets of 1.94 percent. These exceptional returns were achieved despite the fact that Temecula Valley Bank opened two new full service branches and grew its assets by 41 percent from $431 million at Dec. 31, 2003, to $607 million at Dec. 31, 2004.
Even with rapid growth, Temecula Valley Bank has been able to grow its allowance for loan losses from 1 percent at Dec. 31, 2003, to 1.2 percent at Dec. 31, 2004. Also, Temecula Valley Bank has increased its total risk-based capital from 11.54 percent at Dec. 31, 2003, to 11.91 percent at Dec. 31, 2004.
The above accomplishments have assisted with the 31.5 percent appreciation of Temecula Valley Bancorp’s common stock, as stated in your article in the Feb. 7 edition.
Temecula Valley Bank takes exception to the statement in that article, ” had to set aside more than $1 million for loan loss reserves because of a big spike in problem loans.” Temecula Valley Bank increased its provision for loan losses from $1 million in the year ended Dec. 31, 2003, to approximately $4 million for the year ended Dec. 31, 2004.
The increase in the provision was the result of maintaining and building the allowance for loan losses due to the growth in the bank’s loan portfolio. Also, the net charge offs as a percentage of total loans remains well within our peer bank averages at .20 percent for the year ended Dec. 31, 2004.
Net non-performing assets as a percentage of total assets was at .62 percent at Dec. 31, 2004, which is within our peer bank averages, as well. Temecula Valley Bank will continue to prudently grow its allowance for loan losses as the bank grows.
The statement in the article, “Yet another local banker, when told of the size of the non-performing portfolio, said, ‘If that happened to us, I’d have the chief credit officer hanging by his short hairs.’ ”
We strongly disagree with this statement. Our chief credit officer has done an excellent job of maintaining credit quality and maximizing the recoveries from defaulted loans. When reviewing the non-performing assets of a bank specializing in SBA lending, the non-performing assets should be net of the guaranteed portion or measured against total assets serviced. When that is done for Temecula Valley Bank, our non-performing ratios are comparable with our peers.
Stephen H. Wacknitz
President and CEO
Temecula Valley Bank