(CORRECTION: An earlier version of this story included incorrect information regarding First Community Bank's loss for 2008 through 2011. The bank reported a combined $27.6 million loss during that four-year period.)
SANTA ROSA -- First Community Bank is realizing a financial turnaround since its recession-related losses peaked two years ago, restoring profitability and improving asset quality while attracting new demand for loans.
Most recently, that trend has included a sixth consecutive profitable quarter and a portfolio of nonperforming assets that has been reduced by more than half, according to the bank's latest filing with regulators from June 30.
Yet the groundwork for the reversal currently playing out at First Community began even earlier, including a pointed effort to resolve troubled loans that began under founding chief executive Kathy Pinkard and, more recently, under current CEO Deborah Meekins.
[caption id="attachment_59600" align="alignright" width="215"] Deborah Meekins[/caption]
As the improving regional economy spurs new demand for financing, Ms. Meekins, a well-known name in North Bay banking who joined First Community in August 2012, said that the bank is poised to grow anew while eying new business in areas like energy efficiency and renewable energy ventures.
"The recovery had already started when I got here," she said. "In the last year or so, we've seen things really improve."Regulators clear First Community Bank from special oversightSept. 16, 2013
SANTA ROSA -- Financial regulators told Santa Rosa’s First Community Bank this month that they have ended a period of heightened scrutiny that began two years ago. [read more]
First Community was among the many banks in the North Bay and beyond hit hard during the recession, setting aside millions to cover losses as borrowers fell behind on loan payments.
The bank reported a net loss of around $27.6 million for the four years from 2008 to 2011, peaking with an annual operating income loss of $19.5 million in 2011.
Those losses -- and the recent financial crisis itself -- began only three years after the bank began serving customers in February 2005. It was the first new bank in Sonoma County in more than a decade, born from an $18 million initial capitalization by real estate developer William Gallaher and other North Bay business leaders.
A reputation for competitive terms on loans and deposits and efficient turnaround for business financing helped propel the privately held bank's rapid growth, reaching around $800 million in assets in 2009.
"They were the most rapidly growing bank in the history of the North Bay for sure, and one of the fastest growing in the history of California," said Fred Ptucha, a financial adviser with Progressive Asset Management Group in Santa Rosa and a long-time tracker of community bank financials in the North Bay.
Today, a portfolio currently representing around $630 in assets and $494 million in loans reflects a major resolution of those loans that became distressed over the past few years, he said.
The proportion of assets qualified as nonperforming has been reduced by more than 60 percent, from around 10 percent of assets at the end of 2011 to 3.8 percent in June of this year, according to the most recent filing. Net loans, meanwhile, have grown by 8 percent since June of last year.
First Community has also reduced the $25.8 million in foreclosed real estate it held in June of last year by 35 percent, with those sales helping to propel overall income. Net income of $7.5 million for the recently reported quarter was around five times the income from the same quarter last year.
Nearly 12 percent of First Community's assets are considered the highest-quality, liquid assets that regulators use to help evaluate bank strength. The bank was able to set aside 40 percent less as an allowance for loan losses during this latest quarter than during the same quarter two years ago, at $15 million.
"Our customers, overall, are in a better place," said Ms. Meekins, speaking of the broader economy. While tepid job growth and other headwinds remain, "overall, from our standpoint, things are improved."
It is not the first bank recovery involving Ms. Meekins. Executives at Washington-based Sterling Financial Corp. have also credited her for playing a key role in the resurgence of the now $10 billion-asset company while heading its Santa Rosa-based subsidiary, Sonoma Bank. (Sterling is to be acquired by Umpqua Bank, it was announced Wednesday.)
Ms. Meekins had been president of what was once Sonoma National Bank before its sale to Sterling in 2007, and continued in executive roles after the sale. She assumed her role as president of Sonoma National 1990, after joining the bank as chief financial officer in 1985.
Transitioning to First Community has allowed not only more direct involvement in the day-to-day operations of the institution, but also time for participation in nonprofit boards for groups including the Redwood Empire Food Bank and the Santa Rosa Memorial Hospital Foundation, she said.
"It has been a while since I've been at a bank of this size. You get to be more in the thick of things," she said."
Ms. Meekins has recently been at the forefront of First Community's push to provide financing for energy-related ventures. The bank is financing the startup of Sonoma County's public power agency, Sonoma Clean Power, and has also been in talks to develop a program to finance residential energy-efficiency upgrades through Marin County's Marin Clean Energy.
"We're not just interested in Sonoma Clean Power -- we're looking for opportunity," she said. "We're into this business in a big way. It improves the community -- that's what community banking is."
First Community has loaned the greatest dollar volume in the North Bay of commercial loans backed by the U.S. Small Business Administration for two consecutive years, and continues to push in that area with three new hires, she said.
Other recent hires have included North Bay marketing veteran Rhoann Ponseti, whose efforts have included the revamping of First Community's mobile website and the pursuit of a dedicated First Community mobile banking app.
Looking toward the next few years, Ms. Meekins said that the bank is expecting to grow amid a steadily improving economy. The seven-branch bank's footprint currently includes Sonoma and Marin counties and two locations in the East Bay, but the CEO said that the bank has its eye on the possibility of other markets and locations in the future.
"The reputation this bank has is -- we actually get deals done," she said.
