It may have been a lousy year for most banks, but it was quite profitable for four Northern San Joaquin Valley banks, which earned more than $36 million combined in 2009.
Banks specializing in agriculture loans did particularly well.
Lodi's Farmers & Merchants Bank of Central California netted nearly $20.9 million in income and expanded its assets by 11.2 percent.
Stockton's Bank of Agriculture and Commerce made more than $5.5 million, and its assets grew 5.5 percent.
The region's oldest and largest locally owned bank — Bank of Stockton — earned nearly $7.9 million and expanded its assets by 4.2 percent. That 143-year-old institution includes Modesto Commerce Bank and Turlock Commerce Bank.
Oak Valley Community Bank is the only bank with its headquarters in Stanislaus County, and it also was profitable in 2009. Its net income was nearly $2.1 million, and its assets grew by 9.9 percent.
"Revenues for the bank continue to be strong, which has enabled us to improve our already solid capital and liquidity positions," said Ron Martin, Oak Valley's chief executive officer. "While our loan totals were relatively flat, in 2009 the bank made over $100 million in commercial, small-business and consumer loans."
Like most banks, Oakdale-based Oak Valley got stuck with foreclosed property worth significantly less than the defaulted loan values. Foreclosed properties totaled $2.4 million during 2009. That included 51 vacant lots in one Stockton subdivision and 12 homes and lots in another.
"We have made sizable provisions for loan losses in each quarter of this year, and management continues to ensure that all (foreclosed) property is written down appropriately in light of current market values," said Chris Courtney, Oak Valley's president.
Helping Oak Valley cover its real estate losses is a $13.5 million loan from the U.S. Treasury Department. That so-called TARP (Troubled Asset Relief Program) loan from December 2008 requires the bank to make 5 percent annual interest payments.
"It's a cushion," Courtney said of the TARP money. "I like to think of it as a worse-case safety net."
Courtney said that government loan "also allows us to take advantage of strategic opportunities."
That means Oak Valley might use TARP funds to purchase another bank, should a good deal arise. Oak Valley has bid to buy several banks already, but those offers were not accepted.
While Oak Valley made money last year, bank officials say it wasn't easy. They said upper management salaries were frozen and bonuses were eliminated in 2009.
Courtney said he has "very guarded optimism" that 2010 will be better.
Bee staff writer J.N. Sbranti can be reached at email@example.com or 578-2196.