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Vibra Bank Turns a Profit for First Time Since Launching in ’08

VIBRA BANK

CEO: Scott Parker.

Assets: $104.4 million.

Net income: $1.28 million in 2011; net loss of $543,000 in 2010.

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No. of local branches: One.

No. of local employees: 30.

Headquarters: Chula Vista.

Year founded: 2008.

Company description: Commercial bank.

Vibra Bank, which launched right at the cusp of the Great Recession in July 2008, reported its first year of profitability last year.

The one-office bank based in Chula Vista reported that for all of 2011 it made net income of $1.28 million, compared with a net loss of $543,000 in 2010.

For the fourth quarter, Vibra reported a net profit of $576,000, compared with a net profit of $51,000 in the like quarter of 2010.

Scott Parker, Vibra’s chief executive officer, said most community banks take about three years before they begin to turn regular profits so reaching that point was most gratifying, especially given the sluggish economy it was operating in.

“The biggest hurdle for us was the economy,” Parker said. “A lot of businesses aren’t borrowing at the levels they were before the economic downturn.”

The good thing about Vibra’s early years was it had an entirely clean slate, and no where to go but up. It wasn’t carrying any problem loans on its books, or any loans for that matter. Banks generate most of their revenue and profits from the loans they make.

Loan Portfolio Increased

For the past year, Vibra increased its loan portfolio 40 percent to $76.7 million, while boosting its deposits 50 percent to $90 million.

Total assets at the end of December were $104.4 million, up 41 percent from the same month in 2010. That ranks Vibra as the smallest lender in the county among locally based institutions, but Parker said size isn’t that important to many of his customers.

“The market niche we’ve created has contributed to much of our success,” he said, referring to its bicultural focus. Many of its customers are either Mexican companies doing business in this nation, Mexican nationals, or Hispanic-owned enterprises here, and most of the bank’s 30-person staff speak both Spanish and English, Parker said.

The bank’s loan portfolio is divided about evenly among three segments: commercial real estate and some construction; conventional business loans; and loans guaranteed by the U.S. Small Business Administration, Parker said.

The bank became a preferred SBA lender in late 2010 and has picked up production in that area in the past year. For the fiscal year ended Sept. 30, the federal government’s fiscal year, Vibra did 30 loans for $17 million. That ranked it in fourth place among lenders within the San Diego district in gross dollar amount.

Finding Qualified Borrowers

Parker says despite a sluggish economy his team has been able to find good, qualified borrowers that are operating in many different industries, including manufacturing, distribution, restaurants, services and retail.

“One of the benefits of being as young as we are is that we don’t have a concentration of any particular loan type such as real estate so we have a lot more flexibility to do those deals,” he said.

Because its shareholders’ equity is $12.4 million, the maximum loan limit that Vibra can do is about $3 million. The bank’s customers are generally businesses with less than $20 million in annual revenue, Parker said.

Vibra opened with an extraordinary amount of capital for a new bank, raising $14.8 million. Yet, just because it’s still got a nice cushion (its total risk-based capital is 21 percent above the 10 percent level to be well-capitalized), that hasn’t caused it to make bad loan decisions. So far, it reports zero nonperforming loans, or any real estate owned.

“Our underwriting continues to be at a high quality,” Parker said. “We have an experienced team, an experienced board, and we look carefully at every deal that we do.”

Alan Lane, chief executive of Silvergate Bank based in University City and with about $434 million in assets, said the historic norm for community banks to reach profitability is between two and three years. But the fact that Vibra was able to get there while the economy was tanking is remarkable.

“In this environment to have opened a bank right at the start of the downturn and to achieve profitability within three years is a very good accomplishment, and they are to be congratulated,” Lane said.

“When the economy is booming and there’s plenty of growth going on, then everybody gets some share of business,” Lane said. “But the environment we’re in today … there’s not a lot of demand and that makes it tough to grow.”

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