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Monday, Mar 18, 2024
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Torrey Pines Bank Sees 41% Growth Over the Past 2 Years

Torrey Pines Bank, now at $2 billion in assets and the third largest bank based in San Diego, continued to get bigger last year, increasing assets by 17 percent and its loan portfolio by 12 percent.

Over the past two years, the bank, which is a subsidiary of Phoenix-based Western Alliance Bancorporation, grew by 41 percent, far above the average for most community banks, or any bank for that matter.

CEO Gary Cady said the preponderance of that growth happened at the expense of the national megabanks, which control about 80 percent of the state’s market.

“As the smaller community banks had some difficulty competing we picked up some market share from them … but most of our gains came from out-competing the larger banks,” Cady said.

For 2012, TPB reported net income of $20.2 million, compared with $17.5 million in 2011. For the fourth quarter, the bank slipped a bit with net profit of $5.2 million, down from $6.4 million in the prior year’s fourth quarter.

Cady said the dip was the result of TPB having to increase its reserve balance for its much larger loan portfolio and from restructuring charges due to the pending closure of one of its Bay Area offices. The bank now has 12 offices, including eight in San Diego. By May, the total will be 11.

The bank’s nonperforming assets increased to $9.5 million as of the end of 2012 from $8.66 million at the end of 2011. But because the bank’s assets expanded, the ratio of those problem assets fell to 0.47 percent from the prior year end when it held 0.5 percent.

Capital at TPB remains healthy although the total risk-based capital ratio at year end was 10.77 percent, just above the level to be regarded as well-capitalized. Cady said if the bank ever needs more capital, it’s readily available from the parent company, which has about $760 million in equity. Western Alliance had total assets of $7.6 billion as of the end of December.

Launched in 2003, TPB celebrates its tenth anniversary this year. From a single office and seven people, the bank now has 12 offices, and 233 full-time staff. Cady notes that at the end of the first year in business, it had 28 employees; today, 24 of those early hires are still there.

• • •

San Diego Trust sale moves along: Mike Perry, chairman and CEO of San Diego Trust Bank, declined to reveal anything more about the pending sale of the $240 million bank to Irvine-based Pacific Premier Bancorp other than what was in news statements.

The banks have similarities and both are well run, but the signs for SDT’s sale were telegraphed at least a year ago when it continued racking up nice profits, but not by extending new loans.

At the end of 2007 SDT had about $70 million in loans, but by the end of last year it shrunk down to $36.2 million. Perry often said he would be happy to make loans but saw little demand, and preferred to invest in an array of bonds to earn profits.

The transaction with PPB calls for SDT shareholders to receive either cash of $13.41 per share or stock in PPB of 1.114 shares, or a combination of each. That puts the value of SDT at $30.6 million, or about 1.2 times SDT’s book value, which sounds fair especially these days and in view of SDT’s meager loan portfolio.

But PPB wasn’t buying SDT for its loans; it’s a market play for the growing bank that has been in an expansion mode of late and likes the potential of San Diego. Last week PPB completed its purchase of Dallas-based First Associations Bank with $376 million in assets. When the deal for SDT closes, either in the second or third quarter, PPB will have about $1.7 billion in assets.

Though the deal needs the blessing of SDT’s shareholders, this one is a slam-dunk since a good portion of its biggest holders are directors and bank management, and according to the news statement, many clearly want to cash out.

Who can blame them? Banking as an investment isn’t what it used to be.

• • •

Virtual Counseling Network unfolds: Just as the housing market is starting to heat up, along comes a new network of housing counseling services. The system of 10 sites covers San Diego, Riverside and San Bernardino counties, and will be operated by San Diego based Housing Opportunities Collaborative, a nonprofit, with the support of a $200,000 grant from the community development arm of Citibank.

The virtual counselor network terminals will be placed in a variety of accessible locations in San Diego and around the Inland Empire, according to a news statement.

• • •

Small Change: Only one San Diego based credit union made the list of the 50 largest compiled by SNL Financial, San Diego County Credit Union with $5.84 billion, which ranked it 10th biggest. Coming in at No. 1 was Navy Federal Credit Union, based in Virginia and with $52.44 billion in assets.

Send any news about locally based financial institutions to Mike Allen via email at mallen@sdbj.com. He can be reached at 858-277-6359.

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