Heavy losses, new capital hit San Joaquin Bank
| Monday, Jul 20 2009 07:48 PM
Last Updated Monday, Jul 20 2009 07:58 PM
San Joaquin Bank: First-quarter losses updated
San Joaquin Bancorp announced Monday it will re-submit results for the first three months of 2009 as soon as possible.
Revised figures differ significantly from those reported in May; the previous report "can no longer be relied upon," Monday's release said.
Here are highlights of updated information:
* A net loss of $18.2 million, or $4.63 per diluted share. Bank officials previously reported a loss of $3.6 million, or 91 cents a share.
* Significantly more loans counted as troubled: $163 million, compared to a previously reported $105.5 million.
* $37 million set aside during the quarter for possible bad loans in the future, up from $10.7 million. The entire rainy-day fund was brought up to nearly $42 million.
* Loans "charged off," or basically written off as a loss, grew to $10.7 million from $858,000.
* San Joaquin became "undercapitalized" during the first quarter, meaning the bank had less cash on hand than regulations require for the loans on its books.
* Total assets -- the pool of loans that earns a community bank most of its income -- of $872 million, down from $888 million.
More on the Web
Read San Joaquin's press release.
Read a live blog of our interview.
Images
Jenn Ireland / The Californian Bart Hill, President and Chief Executive Officer of San Joaquin Bank, right, and Stephen Annis, Chief Financial Officer of the bank, talk with The Bakersfield Californian Monday afternoon.
Jenn Ireland / The Californian Stephen Annis, Chief Financial Officer of San Joaquin Bank, left, and Bart Hill, President and Chief Executive Officer of the bank, talk with The Bakersfield Californian Monday afternoon.
Jenn Ireland / The Californian Bart Hill, President and Chief Executive Officer of San Joaquin Bank, right, and Stephen Annis, Chief Financial Officer of the bank, talk with The Bakersfield Californian Monday afternoon.
Three dozen investors, mostly Indian, are riding to the rescue of San Joaquin Bank with a $38 million stock purchase, officials said Monday, while simultaneously announcing first-quarter losses five times greater than originally reported.
Bart Hill, the Bakersfield bank's chief executive, said the cash influx will restore the institution's health while revamped first-quarter financial statements will bare its problems "down to the bone."
Many community banks are struggling in the recession, but San Joaquin's troubles have drawn scrutiny from state and federal regulators resulting in a written agreement signed in April.
Regulators wanted the re-do of first-quarter results, said Hill and Stephen Annis, the bank's chief financial officer. As numbers shifted, the bank's required cash levels fell below allowable standards.
If the private stock deal works as hoped, the $38 million infusion will get San Joaquin on solid footing, headed toward a profitable 2010.
Hill called the recapitalization "great news" for investors. Share prices, he hopes, will rise as a result.
Through its holding company, San Joaquin Bancorp, the bank is awaiting the Indian government's approval for the deal to close.
The 36 investors will buy more than 8 million new shares at $4.68 each. They'll own 62 percent of outstanding shares. One representative will get a seat on the board of directors, with a second joining when all shares are purchased.
Hill said the investors were found through local connections.
"We got a little creative here," he said.
San Joaquin has many customers in Bakersfield's Indian community, including its Sikh temples.
Finding capital when markets were frozen was "huge."
"Hold me back from shooting up a skyrocket, from throwing out confetti," Hill said.
DEEP LOSSES
Losses for the first three months of 2009 will be restated at $18.2 million, rather than $3.6 million as reported in May. (See related sidebar for details.)
In addition, loans "charged off" as losses grew from $858,000 to $10.7 million.
Other painful revisions will also go on the books: a surge in problem loans, a decrease in assets, and more than $26 million of additional cash sent to a rainy-day fund.
The good news?
The second quarter, which ended June 30, will be much better. Bank officials planned to put the losses in second-quarter results, but regulators wanted the numbers in first-quarter statements.
Hill and Annis said the bank will post an overall loss this year even though things are looking up for the second half.
Share prices have tumbled since peaking near $39 in October 2006, according to Bloomberg data.
Shares closed unchanged Monday, before San Joaquin's press release came out, at $2.90.
Hill and Annis said they didn't know what caused a sudden price drop last week, when shares dipped as low as $1.36. The company stock trades over-the-counter under the symbol SJQU.
San Joaquin Bank was founded in 1980 and is the largest bank headquartered in Kern County, with $872 million in assets.
