Former CEO and Chairman were making millions of dollars per year and had some rather suspect accounting practices if you ask me!

My analysis of SJB from April 2008:

 http://bakersfieldbubble.bl...

All Central Valley financial institutions feeling real estate impact, except one?

Numerous Central Valley financial institutions are hurting. However, there is one that appears to be bucking the trend. Are they really bucking the trend or is something else going on?
 

Here is a sampling of some recent financial results from Central Valley financial institutions.


Kern Schools FCU (Bakersfield):

 

Based on the 2007 annual report, which I received today, they are showing a decline in net income (from 2006 to 2007) of 71%. According to their report "This drop was caused by loan losses in 2007 totaling $13.055 million, compared to none in 2006".

That is a serious adjustment in loan losses and loan loss provision. However, I would expect loan losses to continue to go up as we find more homedebtors underwater. Look for 2008 losses to be much higher due to declining real estate values, an increase in unemployment and more foreclosures.

 

 

 

American River Bank (Sacramento):


 

American River Bankshares (NASDAQ: AMRB) of Sacramento, parent company of American River Bank, says its net income in the first quarter dropped 12.1 percent from year-ago levels to $1,833,000 from $2,086,000 during the first quarter of 2007.

“Clearly, first quarter earnings were negatively impacted by the $4 million increase from year end in our non-performing loans to nearly $12 million,” says David Taber, president and CEO. “We have a seasoned credit administration team in place that is managing our non-performing loans by establishing appropriate reserves and being proactive towards resolution of these credits."

Pacific State Bank (Stockton):

A squeeze on its interest margins helped lower profits at Pacific State Bancorp (NASDAQ: PSBC) of Stockton in the first quarter, according to Steven Rosso, president and C.E.O.

An increase of $45,000 ($210,000 total addition) or 27.3 percent in the provision for loan losses in the first quarter of 2008 over 2007 levels reflects the weakening economic environment within the bank's service areas, which management is actively monitoring and which may indicate the need to record additional provision in the future, it says.

 

 

 

Capital Corp of the West (Merced):


 

Capital Corp of the West (NASDAQ: CCOW) of Merced, parent company of County Bank, one of the Central Valley’s largest community banks, says it expects to report a net loss for 2007 of about $4 million, once everything is added up.

The bank says it’s “primarily as a result of the rapid decline in real estate values in California's Central Valley in the fourth quarter of 2007.”

It’s telling the Securities and Exchange Commission that it still cannot file the financials for last year because of the number of its loans it has to review “and the inability to obtain timely appraisals and other supporting market information.”

The company says certain of loans require an adverse classification and a substantially greater provision for possible loan losses.

“The company has also concluded that it had material weaknesses in its credit/lending and accounting functions,” it says. “The material weaknesses relate to the proper credit risk classification of loans, establishing the level of its allowance for loan losses, accounting for housing tax partnerships and certain other matters.”

 

San Joaquin Bank

First let me say I have no stock position in this bank. Also, this is not investment advice, I just find it interesting that one bank can report record profits in this declining market while every other bank is getting hammered with losses related to the housing and credit crises. How did they do it? Great risk management or was it an unjustified adjustment in their loan loss provision?

San Joaquin Bank (Bakersfield):


 

San Joaquin Bancorp (OTCBB: SJQU) of Bakersfield says its net income after tax was $9.4 million last year, an increase of 11 percent compared to $8.5 million in net income reported for 2006.

Dilute earnings per share in 2007 were $2.54, compared to $2.29 per diluted share reported for 2006, also an increase of 11 percent.

"We are pleased with the company’s performance in 2007 which represents our 24th consecutive year of record profits,” says Bart Hill, company president
 

 

From their 10k filing (Yahoo.com):
 

We reported record annual net income of $9,418,000 for the year ended December 31, 2007. The majority of the increase in 2007 came from increased net interest income and a reduction in the provision for loan losses.

 

How can a financial institution justify reducing their loan loss provision in an environment like this? All of the Central Valley institutions listed above are doing the opposite. If you look at the reports from the major financial institutions on Wall Street, they are dramatically increasing their loan loss provisions to the tune of hundreds of billions of dollars.

The Bakersfield Californian did a recent story on the CEO where they asked some tough questions of him.

 

Q. What is your favorite thing about doing business in Bakersfield and Kern County?
 

A. The people in Kern County are family oriented, friendly and hard working. That’s a winning combination for business.
 

Q. What’s a fun fact about you?
 

A. It’s sort of odd I’m a sailor in Bakersfield. I grew up sailing in the San Francisco Bay. I sail regularly on the coast. When the America’s Cup is on, I’m probably the only one in town watching it.

Based on that interview I guess we will never find out why they lowered their loan loss provision in what has been called the most difficult time for financial institutions since the Great Depression.

Wow. I just got a phone call from a friend about this and checked in here to see if it was true. And it is.

Many customers saw the writing on the wall; my dad, once a very good customer, took his business elsewhere years ago for a variety of reasons. 

Once Cleo passed away, the bank no longer had a fiscally conservative influence.

Another reason Obama doesn't want to 'go on' FOX'

How's GoldmanSaks doing ?

Another reason Obama doesn't want to 'go on' FOX' -montfred

And that has exactly what to do with this blog? I thought we were having a discussion about a local bank, not Presidents or news networks. Did I miss something?

Vanityfair, you asked if you  missed something?

The community bank's which are too small to save, are the one's funding our local small businesses, I for one.

Keep digging...Bruce use to be partners with Darling-Maclin-and Day...Tax Attorneys at law....

He knows how to play with the numbers and where to hide things...keep digging,amigo...

As CEO...his paycheck was $200.000 / month...still want to know where the banks assets went...

Thanks for your work, Bakersfield Bubble. I have long read you with interest.  

San Jouquin Bank had been on the FDIC watch list that is published at either Calculated Risk or Mish's website.  I didn't see any other Bakersfield banks on the list..

I was astonished by the weekly report of train carloads in 2009 vs 2008.  Overall train traffic is down 17.9% year on year.  That means that a train 100 cars long last year is only 82 cars long this year.http://railfax.transmatch.c...>http://railfax.transmatch.c...

Another eye popper, confirming the trainwreck:  S&P 500 total revenues are down 19.85%  quarter ended June 2009 vs June 2008    http://www2.standardandpoor...

When one-fifth of the top line is evaporates, that has to hurt the bottom line.

However, on that same standardandpoors.com  spreadsheet,  stock price to reported earnings is a ten-times nosebleed at 122.41 times earnings.   People might get killed in the coming stampede to get out of the stock market.

Nothing is getting better yet, and the FHA is still putting people in houses for nothing down. 

Keep up your good work, BB

Where are they?   I could use a house with nothing down.  Low payments too you know.

I hate to see another local business fail.  More folks out of a job.

No jobs were lost--except the ones with the BIG paydays....today's paper OPENED some eyes..at least mine---look at who is the NEW owners....reconize the NAMES???

It's interesting to know that some former high-ups at San Joaquin Bank left to start a new local bank. They took some huge depositors with them, which had to hurt SJB. Millions of dollars walked out with these guys. There are 3 possible scenarios: 1.) All was fair, and they decided to open a new bank during the worst financial crisis of our lifetime simply because the opportunity presented itself. 2.) Being on the inside, they knew the downfall of SJB was coming and decided to take advantage by luring away the good customers to help start their new endeavor. 3.) They were part of the reason for the upcoming downfall, bailed before they would have to answer for it, and didn't care that taking deep-pocketed investors away from their ex-colleages would hasten the end for SJB. I don't know the answer and I'm not accusing anybody of anything, but I find it curious that a new bank was started during an economic crisis by people formerly affiliated with a bank that soon failed. If it's all legitimate, I wish them luck and hope they take good care of their local customers. Local banks are always an asset to the community.

And THIS new bank is.....

"And THIS new bank is....."
 

Valley Republic Bank. I'll restate my original claim of "high-ups" as "high-up" since I'm only sure of it being one person. I was told there are 2 former SJB people involved, but am only familiar with one of them so shouldn't pass on information that I'm not sure about. Bank officer and board member names are public information, so it's out there for anyone who wants to find it. As for SJB, I feel sorry for any employees who get hurt by what's happened, but not for anyone who knowingly made risky loans out of greed, or anyone who got creative with numbers. Any improprieties should have to be answered for.