Local Banks Struggle Amidst Economic Turmoil

Strategic Insights -

The results for local banks in San Diego highlight a struggle to generate profits, with only nine out of the top 20 banks showing net income in 2009. Several banks have failed due to under-capitalized positions, including La Jolla Bank, San Diego National Bank, and Imperial Capital Bank. The ongoing turmoil in commercial real estate values has led to increased loan defaults and losses for many banks. In contrast, the national banking industry shows a more positive outlook, with a net profit of $914 million in the fourth quarter and $12.5 billion for the full year.

Key Takeaways:

  • Only 45% of the top 20 local banks in San Diego showed net income in 2009, indicating a struggle to maintain profitability.
  • Three local banks have failed due to under-capitalized positions, including La Jolla Bank, San Diego National Bank, and Imperial Capital Bank.
  • Many banks experiencing losses were heavy lenders to contractors and land developers, who have been affected by commercial real estate value turmoil.
  • The national banking industry has shown improvement, with a net profit of $914 million in the fourth quarter and $12.5 billion for the full year.
  • Over 50% of banks reported year-over-year improvements in their fourth-quarter results.
  • However, nearly one-third of banks reported net losses, down from 34.6% in the prior year's fourth quarter.
  • Charge-offs totaled $53 billion in the last quarter, up from $38.6 billion in the prior year's fourth quarter.
  • The FDIC classifies 19.6% of banks as having serious problems, with 702 banks on the problem list as of the end of December.

Statistics:

  • $914 million: net profit for the nation's banks in the fourth quarter.
  • $12.5 billion: total net profit for the nation's banks in 2009.
  • 8,000+ institutions: number of banks in the nation.
  • 45%: percentage of top 20 local banks in San Diego showing net income in 2009.
  • 702: number of banks on the FDIC's problem list as of the end of December.
  • 19.6%: percentage of banks classified as having serious problems.

Sources:

  • San Diego Business Journal's Local Banks list, 2010 Book of Lists.
  • Federal Deposit Insurance Corp. (FDIC) data for fourth quarter and full year 2009.