Sunday, July 26, 2009

Good News for One of Downtown's Own

Downtown Pomona's California Bank and Trust sent us this letter from its president and asked us to share it with you.

July 24, 2009

Dear Valued Customer:

While the economy continued to struggle this past quarter in what’s proving to be a very difficult recession, California Bank & Trust (CB&T) remained profitable. Liquidity and capital ratios improved this quarter, and the net interest margin and efficiency ratio remained very strong. Higher Credit Costs Offset by Strong Operating Earnings CB&T realized net income of $35.8 million for the six months ending June 30, 2009, compared to $47.4 million for the same period of 2008. The decline was primarily due to higher provisions for credit losses and a one time industry-wide special FDIC insurance assessment. This was partially offset by higher net interest income and onetime gains on the acquisition of Alliance Bank and interest rate swap contracts.

Improved Capital Ratios
CB&T’s capital ratios increased significantly in the second quarter compared to March 31, 2009. The Tier 1 Risk-Based ratio increased from 8.08% at March 31, 2009 to 9.56% at June 30, 2009, while the Total Risk-Based capital ratio increased from 10.25% to 10.81%.

Higher Credit Costs
CB&T recorded a provision for loan losses of $92.4 million in the six months ending June 30, 2009, compared to $43.9 million for the same period of 2008. The increase is a reflection of continuing declines in real estate values and weak economic conditions as evidenced by the current unemployment rate and increase in corporate bankruptcy filings. CB&T experienced a modest increase in non-performing loans during the quarter. We’re still confident that our strong underwriting will mitigate losses and that our exposure remains manageable.

Vineyard Bank Acquisition
Last Friday, July 17, 2009, CB&T acquired most of the loans and deposits of Vineyard Bank from the FDIC. CB&T acquired approximately $1.4 billion of loans, $1.5 billion of deposits, and 16 branches, most of which are located in the Inland Empire. The transaction includes a loss sharing agreement with the FDIC on all loans and real estate owned. The acquisition will result in an estimated pre-tax gain of more than $100 million in the third quarter and will
increase regulatory capital ratios. This is the second FDIC assisted acquisition we have completed this year, having acquired the loans and deposits of Alliance Bank in February.

Zions Bancorporation Earnings Release
Our parent company, Zions Bancorporation, recently announced its quarterly results for the Second Quarter. Their complete earnings release may be found at Their results reflect a strong balance sheet with improved capital levels, but also ongoing credit strain negatively impacting earnings as result of a weak credit environment throughout the Zions footprint. In summary, we’re pleased with our second quarter and year-to-date results. The strength of our bank is a direct reflection of the quality of our customer base. Thank you for your continued business. We look forward to meeting your banking needs as we plot a course toward California’s recovery together.


David Blackford
President and CEO MEMBER FDIC


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