Title: Community Banking Outlook 20092010 North Santa Barbara County Economic Outlook
1 Community Banking Outlook 2009-2010North
Santa Barbara County Economic Outlook
Gary Steven Findley The Findley Group 1470 N.
Hundley Street Anaheim, CA 92806 (714)
630-7136
2Topics To Cover
- General Comments on Banking Environment
- What We Are Telling Community Bankers
- View on Local Community Banks
3General Comments on Banking Environment
- Dual Banking System Exists
- Most of Majors Are Insolvent If You Mark To
Market Stress Testing - Nationalization is a Reality!
- Regulators Dont Have Viable Plans
- Media Not Helping Hysteria
- Failures Will Happen Interesting But Good For
System
4General Comments on Banking Environment Cont..
- CPP Is Not A Bailout But Not Friendly
- Number Of Banks To Reduce (8,000 To 5,000)
- Geographic Location Does Make Difference
- Long Deep Recession D Word?
- Change In Behavior Needed
- Ghost Towns Now a Reality
5Community Bank Observations2008 2009
2010Have and will be challenging!Nasty, Ugly
and Uncomfortable!Ever Changing!
6General Observations and Trends
- Regulatory Tightening To Continue
- Market Value Drop Has Hurt Everyone
- New Banks Why?
- NIM Issues
- Deposit Growth Remains and Issue/ Liquidity
Crisis? - Earnings Disappearance / Continuing (Do-Overs!)
- Light Merger Activity for Now Except Failed
Banks
7Regulatory Major Concerns
- Reserves
- Liquidity
- Portfolio / Concentrations
- Capital Source
- Priorities!
82009 Will Have Regulatory Challenges - - Most
Will Survive - - But Some Will Not!
- - - Expect A Few Scars and Bruising
- - - Expect 10 Plus Failures Within California
- - - 65 With Enforcement Action or
- Major ROE Criticism Up From 35
- - - CYA A Factor
- -- No Trust Exists
-
9BANK STOCK VALUES HAVE DROPPED AND WONT COME
BACK FOR MAYBE 2 YEARS - WHY?
- Performance Ratios Not Favorable
- Merger Speculation / Lack
- Earnings Non Existent
- Fear and Panic
- Institutional Investor Flight
10Market Value Expectations 2010/2011
- P/E - 10-13
- BVM - 0.75-1.50
-
- High Performance
- ROAA 0.80
- ROAE 8.00
- There Are Some Good Buys
11New Banks - - Why Bother - Regulatory
Shutdown
- Perceived Guaranteed Value - - Not True
- Excess Capital - - No Shareholders
- Lack of Talent
- Acquisition Is A Better Entry
- Poor Business Plans
- Majority of Problems are De Novo Banks!
- Asset Quality
- Failure of Business Plans
12Net Interest Margin Issues To Continue!
- Squeeze Both Sides
- Government Funds Flooding Market
- Too Many Banks NIM Focused
- Need To Work On
- Efficiency Ratios
- Non Interest Income
- Quality Continues to Slip On Loans With Yield
- Deposit Cost of Funds Can Only Go So Low!
- Must Weather Storm!
13Disappearance In Earnings
- Numbers Are Single Digit for Good Banks
- Loan Loss Reserves - - Big Increases
- Competition / NIM
- Lot Of Impairment Issues
- Performing Non Performers
- Overall Loss 2008 and Wonder About 2009!
- Great For Few /Tougher For Most
- Restating Premier Performers
- A Lot of Carcasses on Banking Road 2009!
14What Will The Merger Acquisition Field Be Like in
2009 / 2010?
- Fewer People Talking (Some Out of Game)
- Few Small Deals - - But Not For Lack of Trying
- Pricing Will Come Down Below Book on A lot!
- Take Unders Will Occur
- Seller Expectations Have Softened
- More Pain and Desperation Needed
- Some Winners But A Lot Of Caution
- Cash Deals Will Be Limited (Preserving Capital)
152009 - 2010 Forecast
- Number of Banks 2010 - - Down 20
- Increased M/A Activity 2009/2010
- Dog Auction and Bail Out!
- LLR Will Go Up 40 BP
- Low Single Digit Net Loan Growth
- Low Single Digit Core Deposit Loss
- Market Value to Remain Low
- 65 Banks Under Regulatory Scrutiny
- Big Brother Environment
16View On Local Community Banks11 Banks
Headquartered In General Area Some Good
BanksSome Weak Banks
17American Principle Bank San Luis Obispo
Opened 2007
(000)
- Total Assets 176,308
- Total Shareholder Equity 40,557
- Undivided Profits (2,312)
- Total Loans 120,780
- Loan Loss Reserves 1,861
- ALL/Total Loans 1.54
- Non-Perform Loans/OREO 0
- Total Deposits 129,090
- Total Brokered Deposits 9,992
- Loan/(Deposits-Brkd. Deps.) 101
- Net Income 204
- Provision LLN 215
- ROAA 0.49
- Total Risk Based Capital 32.15
- Total LC Ratio 24.65
- CPP No
18American Riviera Bank Santa Barbara
Opened 2006
(000)
- Total Assets 131,575
- Total Shareholder Equity 19,538
- Undivided Profits (6,638)
- Total Loans 91,172
- Loan Loss Reserves 1,107
- ALL/Total Loans 1.21
- Non-Perform Loans/OREO 0
- Total Deposits 105,167
- Total Brokered Deposits 6,887
- Loan/(Deposits-Brkd. Deps.) 93
- Net Income 5
- Provision LLN 46
- ROAA 0.02
- Total Risk Based Capital 19.05
- Total LC Ratio 15.99
- CPP No
19Bank of Santa Barbara Santa Barbara (Capitol
Bancorp)
Opened 2005
(000)
- Total Assets 63,139
- Total Shareholder Equity 6,338
- Undivided Profits (2,062)
- Total Loans 54,388
- Loan Loss Reserves 1,184
- ALL/Total Loans 2.18
- Non-Perform Loans/OREO 2,044
- Total Deposits 51,702
- Total Brokered Deposits 6,477
- Loan/(Deposits-Brkd. Deps.) 121
- Net Income (307)
- Provision LLN 507
- ROAA (1.82)
- Total Risk Based Capital 10.40
- Total LC Ratio 7.62
- CPP No
20Coast National Bank San Luis Obispo
Opened 1997
(000)
- Total Assets 188,011
- Total Shareholder Equity 17,532
- Undivided Profits 5,958
- Total Loans 142,280
- Loan Loss Reserves 3,124
- ALL/Total Loans 2.20
- Non-Perform Loans/OREO 9,969
- Total Deposits 157,042
- Total Brokered Deposits 2,034
- Loan/(Deposits-Brkd. Deps.) 92
- Net Income (505)
- Provision LLN 500
- ROAA (1.08)
- Total Risk Based Capital 12.91
- Total LC Ratio 9.30
- CPP No
21Community Bank of Santa Maria Santa Maria
Opened 2001
(000)
- Total Assets 130,225
- Total Shareholder Equity 15,748
- Undivided Profits 2,343
- Total Loans 115,370
- Loan Loss Reserves 1,581
- ALL/Total Loans 1.37
- Non-Perform Loans/OREO 3,196
- Total Deposits 114,190
- Total Brokered Deposits 0
- Loan/(Deposits-Brkd. Deps.) 101
- Net Income 50
- Provision LLN 148
- ROAA 0.15
- Total Risk Based Capital 13.79
- Total LC Ratio 11.95
- CPP No
22Community West Bank, NA Goleta
Opened 1989
(000)
- Total Assets 669,814
- Total Shareholder Equity 51,872
- Undivided Profits 14,251
- Total Loans 498,854
- Loan Loss Reserves 13,414
- ALL/Total Loans 2.69
- Non-Perform Loans/OREO 23,446
- Total Deposits 492,953
- Total Brokered Deposits 137,431
- Loan/(Deposits-Brkd. Deps.) 140
- Net Income (6,701)
- Provision LLN 12,555
- ROAA (4.04)
- Total Risk Based Capital 10.92
- Total LC Ratio 7.68
- CPP Yes (15,600)
23Founders Community Bank San Luis Obispo
Opened 2005
(000)
- Total Assets 103,383
- Total Shareholder Equity 11,182
- Undivided Profits ( 375)
- Total Loans 87,864
- Loan Loss Reserves 1,232
- ALL/Total Loans 1.40
- Non-Perform Loans/OREO 2,527
- Total Deposits 91,556
- Total Brokered Deposits 0
- Loan/(Deposits-Brkd. Deps.) 96
- Net Income (4,645)
- Provision LLN 857
- ROAA (1.87)
- Total Risk Based Capital 13.02
- Total LC Ratio 11.31
- CPP No
24Heritage Oaks Bank Paso Robles
Opened 1983
(000)
- Total Assets 859,558
- Total Shareholder Equity 91,705
- Undivided Profits 41,722
- Total Loans 690,086
- Loan Loss Reserves 10,429
- ALL/Total Loans 1.51
- Non-Perform Loans/OREO 22,864
- Total Deposits 665,517
- Total Brokered Deposits 87,710
- Loan/(Deposits-Brkd. Deps.) 119
- Net Income 1,233
- Provision LLN 2,110
- ROAA 0.53
- Total Risk Based Capital 11.49
- Total LC Ratio 9.75
- CPP No
25Mission Community Bank San Luis Obispo
Opened 1997
(000)
- Total Assets 225,845
- Total Shareholder Equity 26,699
- Undivided Profits 2,568
- Total Loans 152,932
- Loan Loss Reserves 4,038
- ALL/Total Loans 2.64
- Non-Perform Loans/OREO 4,402
- Total Deposits 162,381
- Total Brokered Deposits 55,450
- Loan/(Deposits-Brkd. Deps.) 143
- Net Income 246
- Provision LLN 300
- ROAA 0.01
- Total Risk Based Capital 16.07
- Total LC Ratio 11.85
- CPP Yes (5,116)
26Montecito Bank and Trust Montecito (S Corp)
Opened 1975
(000)
- Total Assets 882,339
- Total Shareholder Equity 68,704
- Undivided Profits 64,516)
- Total Loans 529,127
- Loan Loss Reserves 6,904
- ALL/Total Loans 1.30
- Non-Perform Loans/OREO 8,913
- Total Deposits 744,285
- Total Brokered Deposits 2,834
- Loan/(Deposits-Brkd. Deps.) 72
- Net Income 1,282
- Provision LLN 950
- ROAA 1.59
- Total Risk Based Capital 10.62
- Total LC Ratio 9.25
- CPP No
27Santa Lucia Bank Atascadero
Opened
1985
(000)
- Total Assets 259,718
- Total Shareholder Equity 28,718
- Undivided Profits 11,388
- Total Loans 197,323
- Loan Loss Reserves 2,132
- ALL/Total Loans 1.08
- Non-Perform Loans/OREO 1,503
- Total Deposits 222,484
- Total Brokered Deposits 0
- Loan/(Deposits-Brkd. Deps.) 89
- Net Income 268
- Provision LLN 240
- ROAA 0.28
- Total Risk Based Capital 14.45
- Total LC Ratio 11.11
- CPP Yes (4,000)
28Questions?Thank You.