Every community bank headquartered in the central San Joaquin Valley reported a profit in 2012 -- the first time since before the recession struck that no local bank lost money.
Of 11 banks based in Fresno and Tulare counties, five reported their most profitable years ever in 2012. And the region's youngest bank reported its first-ever annual profit -- albeit a meager one -- after four years of losses.
All but three of the banks saw their earnings rise from 2011 to 2012, according to financial reports filed by each institution with the Federal Deposit Insurance Corporation.
The biggest of the Valley's banks, Porterville-based Bank of the Sierra, also posted the year's biggest profit at more than $9.1 million. But that was down from 2011, when the bank's net earnings were $9.5 million, and well short of the company's high-water mark of nearly $22.7 million in 2007, just before the wheels fell off the region's economy.
"While challenges are still evident, this past year provided a great deal of positive momentum," said James C. Holly, Bank of the Sierra's president and CEO, in the company's earnings statement.
"We experienced loan growth that far-outpaced initial projections, we saw continued expansion of core deposits and customer relationships, and for much of the year we were able to achieve significant progress with regard to nonperforming loans."
"Looking forward, there are signs of economic improvement, and real estate values in our region appear to have stabilized," Holly added.
At Fresno's Central Valley Community Bank, 2012 earnings came in at just under $8 million -- the highest in the bank's 32-year history, said president and CEO Daniel J. Doyle.
In the bank's earnings statement, Doyle said the record profit came amid a very competitive environment among banks seeking to make new loans.
"We are seeing some increase in loan commitments," he said, "but reduced usage on lines of credit due to economic uncertainty has impacted our business borrowers and the profitability of many of our agriculture-related borrowers."
Central Valley Community's report was issued on the heels of the company's announcement of a planned merger with Visalia Community Bank, a deal that is expected to receive regulatory approval this year.
Also posting record profits in 2012 were Premier Valley Bank in Fresno, reporting net earnings of $6.1 million; Valley Business Bank in Visalia, where earnings were just under $3.7 million; Fresno's Security First Bank, with a profit of $779,000; and Visalia-based Suncrest Bank, with net earnings of $412,000 -- the first profit since the bank was founded in 2008.
The biggest one-year turnaround among the Valley's banks was reported by United Security Bank in Fresno, which posted a return to profitability after three straight years of losses.
In its year-end FDIC report, the bank's net earnings for 2012 were more than $5.8 million, compared to the $12.4 million loss reported in 2011.
United Security was a substantial lender to developers who found themselves struggling to sell new homes -- and repay their loans -- after the Valley's housing bubble burst.
For several years, the bank was forced to allocate large sums toward reserves for loan losses, and those counted against the bottom line.
That pressure has eased considerably. In 2011, the bank set aside more than $13.6 million as a provision for loan and lease losses, compared to just over $1 million in 2012.
In a fourth-quarter and year-end earnings statement issued last week, United Security president and CEO Dennis Woods said things are looking up: "We continue to see positive trends in the local economy and look forward to continued improvement in the coming year."
Distributed by MCT Information Services
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