Ojai Community Bank: SPCB owner adopts FDIC required action program

April 29, 2011
Santa Paula News

Ojai Community Bank (OCB), and  Santa Paula Community Bank, a Division of Ojai Community Bank,  joined the ranks of about two-thirds of the nation’s banks that have been ordered to adopt an action program designed to further enhance the strength and stability of bank operations.

According to a bank statement, for the calendar year ending December 31, 2010 the bank - founded in 2005 - saw continued and stable asset growth. Total assets increased 10.2% to $123.9 million. The loan portfolio increased $4.8 million to $85.8 million.

For the calendar year 2010, the core earnings were $1.2 million, before a provision for loan loss reserves of $1.9 million and an extraordinary income event of $500,000. This activity and other adjustments resulted in a reportable loss for the 2010 calendar year of $289,000.

For the calendar quarter ending March 31, 2011 assets continue to be stable, with new loan volume declining slightly. Outstanding loans decreased from $85.8 million at the end of 2010 to $79.2 million on March 31, 2011. Core earnings for the quarter were $240,000 before a provision for loan loss reserves of $175,000, resulting in reportable income of $65,000.

The bank’s recent decline in loan quality, coupled with lower capital ratios as a result of increased loan loss provisions, has led to the FDIC requiring closer oversight of the bank. Effective March 31, the bank entered into a Consent Order with the FDIC, a formal agreement designed to strengthen financial performance, restore earnings, improve asset quality, and provide for adequate capital and liquidity.

In addition, the bank is confident that its operating loss will reverse as economic pressures on our community ease.  The loss was primarily the result of setting aside large reserves in cases where real estate values have fallen significantly and borrowers are struggling.

The outstanding balances are for the most part lines of credit, second mortgages, and commercial real estate for area customers. “Our goal is to keep people in their houses” and business properties, and, Dave Brubaker, OCB President/CEO noted, “We haven’t foreclosed on a property yet.”

Ojai Community Bank is just the latest of the wave of those that were affected by the widespread downturn of the economy and meltdown of the larger lender market.

Brubaker compares the reverberation of market troubles to the concerns of Y2K, when it was feared that computers globally would crash at the turn of the century bringing the world to a technological standstill.

“Credit,” he noted, “is the Y2K of the decade.” As it is, “Many of the requirements set forth in the Consent Order have been satisfied or are in the process of being completed,” including a capital plan now being formulated which the bank intends to implement. As to credit issues, Brubaker said the bank is “addressing these issues aggressively, albeit it is difficult in these tough economic times to see our friends and neighbors day in and day out in the grocery store or gas station, knowing some of them are struggling to pay us back.

“The bank is well on our way to correcting many of the items in the order,” and Brubaker believes “with the corrective actions undertaken, we will continue to strengthen the safety and soundness of our operation, increase profitability, and prospects for the bank.”

And that includes continuing to focus on the community market: “We will focus on what we have to focus on as a business owner and it is business as usual for our customers.

“These are all relationships we want to continue, that trust and support,” Brubaker said is a hallmark of community banking.

Ojai Community Bank operates three branches in Ojai and Santa Paula.  Under the symbol OJCB, stock is traded through Stone and Youngberg and Howe Barnes Hofer & Arnett. The bank’s website is www.ojaicommunitybank.com.

(Portions of this story include statements from a OCB provided press release that includes forward-looking information, which is subject to the “safe harbor” created by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act and the Private Securities Litigation Reform Act of 1995. When the Bank uses or incorporates by reference in this letter the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “commit,” “believe,” and similar expressions, the Company intends to identify forward-looking statements. Our actual results may differ materially from those projected in any forward-looking statements, as they will depend on many factors about which we are unsure, including many factors that are beyond our control.)

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