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Also: AltaPacific, Westamerica report increased earnings

Charter Oak Bank in Napa reported a loss of $7.3 million for the second quarter of the year as it reserved against loan losses.

Total assets are $140.5 million.

Brian Kelly, the president and chief executive officer said, “We reserved fairly heavily basically reflecting the local economy. The big banks took hits about 18 months ago, and now things are impacting the small businesses.”

He said small businesses that were not too leveraged did well through the worst of the recession but now have all but gone through their reserves.

“The losses we took were mostly surrounding development,” he said. “It is contractors, developers and landowners.”

He said the bank recognizes the issues and knows that while the regulators are going to be concerned at strength and capital and whether the management team is being prudent, he hopes the loss reserves will help in showing that the bank is on top of the areas of concern.

“All regulators want good capital and good growth, and we are hoping to pull through this period of uncertainty,” he said.

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The Federal Deposit Insurance Corp. issued its list of state nonmember banks recently evaluated for compliance with the Community Reinvestment Act.

The list covers evaluation ratings that the FDIC assigned to institutions in May 2010. The CRA is a 1977 law intended to encourage insured banks and thrifts to meet local credit needs, including those of low- and moderate-income neighborhoods, consistent with safe and sound operations.

Ratings Definitions: O is Outstanding; S is Satisfactory; NI is Needs to Improve; and SN is Substantial Non-compliance.

First Community Bank received a rating of S, Sonoma Valley Bank received an NI, Westamerica Bank received an S and Savings Bank of Mendocino received an S.

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Hennessy Advisors announced fully diluted earnings per share of $0.05 for the quarter ending June 30. Net income was $275,000 compared to $23,000 in the same period of 2009.  Assets under management grew from $775 million on June 30, 2009 to $813 million on June 30, 2010.

“We are very pleased to report quarterly results to our shareholders where revenue, income, earnings and assets under management have all increased,” said Neil Hennessy, president and chief executive officer of Hennessy Advisors Inc.

“The financial markets have continued to be incredibly volatile,” he said. “And I feel like we are watching a ‘vertical tennis match’ with lobs going up and lobs coming down. Our assets under management have likewise been volatile. However, we continue to manage our business, as we do our mutual funds, with discipline and consistency.”

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Sterling Financial Corp., holding company of Sonoma Bank, reported a second quarter net loss of $58.2 million, a $30.5 million reduction in losses over the first quarter of 2010.

The net loss of $1.12 per common share included a provision for credit losses of $70.8 million, which reflects a $17.8 million reduction from the first quarter provision.

“Sterling reported a narrower net loss for the second quarter compared to the first quarter, with a smaller provision for credit losses,” said Greg Seibly, Sterling president and chief executive officer. “We sold off a significant number of non-performing loans as we worked to rebuild and strengthen our balance sheet. At the same time, our core banking business continued to improve as Sterling expanded its retail customer base and increased loan originations compared to the first quarter of 2010.”

Deposits were reported at $7.2 billion, down from the $8.3 billion in the same quarter last year. Loans totaled $6.1 billion, down from $8.4 billion last year.

Total assets are $9.7 billion, down from $12.4 billion the same quarter last year.

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AltaPacific Bank reported increased earnings for the eighth consecutive quarter. The bank reported net income for the quarter totaling $208,000 and year-to-date net income totaling $398,000 for the period ending June 30, respectively. The bank recently celebrated its fourth anniversary as it opened for business on July 10, 2006.

Assets totaled $87.5 million at the end of the quarter, an increase of 20.3 percent over the same quarter last year. Loans totaled $60 million, an 8.2 percent increase over the second quarter last year. Deposits totaled $57.5 million at quarter’s end, an increase of 19.6 percent from the same period last year.

The bank’s total Risk-Based Capital Ratio totaled 36.8 percent, substantially exceeding the 10 percent minimum ratio for a well-capitalized institution.

“We have certainly benefited from our decision to remain patient and disciplined throughout these tough economic times,” said Charles Hall president and chief executive officer.

“As the bank continues to focus on its original business plan and core operating principles, we are hopeful we will experience continued success. We are all very pleased with our success since opening the bank in 2006 and are very excited about the opportunities which exist in our future.”

At the 2010 annual meeting, AltaPacific Bancorp, the bank holding company, was approved. Regulatory applications have been filed and management is awaiting final approval. It is expected that the formation process will be completed within the next 60 days.

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Westamerica Bancorporation, parent company of Westamerica Bank, reported second quarter net income applicable to common equity of $23.6 million compared to $22.1 million in the second quarter of 2009.

“Westamerica’s net interest margin rose to 5.62 percent in the second quarter 2010 from 5.60 percent in the prior quarter. We continue to apply our long-held practice of focusing on checking and savings deposits, which now represent 78 percent of our deposit base. The annualized cost of funding our loan and investment portfolios was only 0.31 percent in the second quarter 2010,” said Chairman, President and CEO David Payne.

The provision for loan losses was $2.8 million for the second quarter 2010, compared to $2.6 million for the second quarter of 2009.

At June 30, total assets and total loans outstanding were $4.7 billion and $2.9 billion, respectively.

Deposits were reported at $3.9 billion, down from $4.2 billion reported at the end of the same quarter last year.

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Submit items for this column to Jenna V. Loceff at jloceff@busjrnl.com, 707-521-4259 or fax 707-521-5292.