February 2010 M T W T F S S « Jan 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pages
By Chris H. Sieroty
Contributing Writer
With SMG’s contract to operate the Ontario Convention Center set to expire in June, city officials have begun to explore their options. Among the possibilities are having city staff oversee the facility, approving a new contract with its current operator or contracting with a new company to operate the space.
Based in Philadelphia, SMG has operated the 225,000-square-foot, city-owned convention center for the past 10 years. Instead of the city council automatically approving another two-year contract, Ontario City Manager Gregory Devereaux told The Business Press that his staff was directed to prepare a report that would outline the best options for running the exhibit and meeting facility.
He said the report was scheduled to be completed in the first quarter and then presented to Mayor Pro-Tem Jim Bowman and Councilman Alan Wapner, who were chosen to lead a subcommittee to explore the city’s options for operating the convention center. The committee will then make recommendations to the city council, the city manager said.
“In these times, it’s prudent to explore what your options are in running the convention center in the most cost effective way,” Devereaux said. “In the end, we want to make a recommendation that would be the most economical. We do this constantly with all our departments and programs … this one just happens to be more public.”
The Ontario Convention Center, which was first opened in 1997 and operated as a non-profit for two years, operates at about a $1.5 million annual deficit. While city officials would like the convention center to break even or even show a profit, Devereaux said it acts “as a loss leader” in an effort to increase local TOT taxes (Transient Occupancy Tax) and business for local hotels and restaurants.
Wapner agreed, saying the review would give the city the opportunity to gage if the current contract was doing what it was supposed to do, increase the amount of TOT collected by the city.
“I’m concerned that the convention center is not generating enough TOT taxes,” Wapner said. “I don’t know if it’s because of the economy or the way it’s being managed or a combination of both. But this process will give us time to review how the facility is being run.”
In fiscal year 2007-2008, Ontario collected $11 million in gross TOT, according to a city official. In fiscal year 2008-2009 that declined to $8.7 million.
Grant Yee, the city’s finance director, said TOT were expected to decline to around $8 million in the current (2009-2010) fiscal year that ends June 30.
Wapner said he and other council members were also concerned if SMG was fulfilling commitments it made two years ago when their contract was renewed. Those commitments included using the company’s buying power to reduce costs, and a national marketing team to book larger conventions and trade shows at the facility and bringing down the convention center’s operating deficit.
“I’m not sure we’ve met our goal of building tourism and supporting local businesses while bringing down the operating deficit,” the councilman said. “Or even if it’s being operated in the best interests of the Ontario Convention Center or SMG.”
Bob Brown, an SMG employee and general manager of the convention center, said “We are following the direction of the city manager and city council and providing all the information they need to do their diligence of exploring the contract extension.”
In a report prepared by its staff, the Ontario Convention Center expected to generate $4.1 million in economic impact from 25 events in the third quarter that ended Sept. 30. Fourth-quarter economic impact figures were not available.
“No event is too big or too small, especially in this economy,” Director of Sales Amita Patel said in a statement. “We continue booking events and stirring business with visitors who will book rooms at local hotels and spend at local eateries and shops.”
In the statement, Brown added: “A convention center’s purpose is to generate economic impact. We support and help local businesses thrive with every event we book.”
Wapner, whose term ends in December 2010, expressed concern that SMG was not attracting large enough events that would increase occupancy rates at local hotels. In a report prepared by Bruce Baltin, senior vice president with PKF Consulting in Los Angeles, the economic downturn and modest increase in the hotel supply this year was expected to lead to “immense pressure and increased competition among local hotels.”
In 2010, the hotel market was expected to remain tough, but Baltin wrote the “long term outlook for the Inland Empire and Ontario is favorable.”
Overall, PKF Consulting predicted that 2009 year-end hotel occupancy rate in Ontario would be 60 percent, then showing a slight decline in 2010 to 59 percent before rising to 62 percent in 2011 and 2012.
“My job is to make sure (local) hotels survive through this economy,” Wapner said. “SMG’s job is to look at convention center’s bottom line, while my job is also to look at the bottom line for the city as a whole.”
Among the options is running the facility in house, but Devereaux said initial indications were that it would be unlikely “you would go purely in house” to operate the convention center because of the increased employee and pension costs.
He said the city had also been contacted by consultants seeking to represent the city in its negotiations with SMG and had received an inquiry from Global Spectrum about the possibility of replacing SMG. Messages left with Global Spectrum executive Todd Glickman were not returned.
Based in Philadelphia, Global Spectrum is a division of Comcast Spectacor, a sports and entertainment company which owns the Wachovia Center, Philadelphia Flyers, Philadelphia 76ers, and Comcast SportsNet. Global Spectrum was one of the companies that originally bid for the operating contract in 1999.
“I got a letter from another firm expressing interest,” said Wapner, who declined to identify the company. “There is interest out there.”
Wapner expressed the hope that a decision could be forthcoming by January but wanted to give city staff the time they needed to complete their report.
“We need to give SMG an answer by the end of January, but I don’t think it will make a difference if we take a couple of extra weeks,” he said. “Maybe in the end we’ll be able to strike a better deal with SMG.”
By Chris H. Sieroty
Special to The Press-Enterprise
A new warehouse planned in Ontario appears to be another distribution center for Atlanta-based Home Depot Inc.
ProLogis announced late Tuesday that it would begin construction in December on a warehouse at the southwest corner of Etiwanda Avenue and Fourth Street in Ontario within its Crossroads Business Park, a 281.7-acre master-planned project near the interstates 10 and 15 intersection.
ProLogis declined to identify who would occupy the 667,000-square-foot facility, but documents filed by the developer with the city’s planning department show the occupant will be Home Depot. Messages left with Paula Drake, senior manager of corporate communications with Home Depot, were not returned.
Earlier this year, Home Depot moved into a 650,000-square-foot building at ProLogis Park Redlands. Home Depot also operates a distribution center in Mira Loma.
“The retailer is a longstanding customer, and we are pleased to once again meet the company’s needs for distribution space,” said Richard Strader, ProLogis Global Corporate Services’ senior vice president, in a statement. “Upon completion of this facility, the company will occupy approximately seven million square feet of ProLogis distribution space in 13 markets across the country.”
ProLogis said the project would be built on a 55-acre parcel within the development. Terms of the deal were not released, but with an average construction price in the region of between $70 to $90 per square foot, the new facility at the low end of the scale would cost approximately $46 million to construct. It is scheduled to be completed next fall.
With an industrial vacancy rate of 9 percent at the end of the third quarter and construction of new industrial facilities all but halted since the recession took hold in late 2008, a new project has been welcomed by Ontario officials.
“Any construction jobs or permanent jobs in an (economic) cycle like this are welcome,” said Ontario City Manager Gregory Devereaux. “It will be occupied by a nationally known tenant and a builder that has developed other projects in the area.”
Devereaux said it also demonstrated ProLogis’ “faith in our market.”
Based in Denver, ProLogis has about 45 million square feet of industrial space in Southern California. At Crossroads Business Park, Home Depot would be located next to buildings occupied by Gillette and Oakley Inc.
By Chris H. Sieroty
Contributing Writer
Winco Foods LLC, a privately held Boise, Idaho, discount grocer that has expanded its footprint in the two-county region, says its plans to open additional outlets remain on track despite the area’s economic instability.
WinCo plans to open two to three more stores in Southern California by the end of 2010, said Michael Read, WinCo’s vice president of public and legal affairs. They will join three stores the company recently opened in the Western United States, including an outlet in Hemet.
“We describe our company as discount supermarket chain,” Read said in an interview. “We are usually double the size of a traditional supermarket and feature national brands. We focus on pricing and work to be the low price leaders in the (markets) we serve.”
Read, who declined to comment on the future Inland Southern California locations, said Riverside and San Bernardino counties were an attractive market because of demographics. The chain’s business model continues to be centered around individual consumers or families on a budget. Analysts described WinCo’s core consumer as “middle income.”
“We’ve been in the Inland Empire for a several years,” he said. “Our new store in Hemet was a natural process of our overall plans for growth in California.”
Currently, WinCo Foods operates eight Inland Southern California locations, including Hemet, Temecula, Moreno Valley, Fontana, Indio, Apple Valley, Victorville and Pomona.
“We look at the overall market before we decided where to open a new location,” he said. “We look at traffic patterns, demographics, how shoppers spend their food dollars and make sure the store has good visability from the street. Right now our real estate development team is looking for properties throughout the Western United States.”
With sales expected to top $4.5 billion this fiscal year, the company was in a strong financial position to support its expansion goals. Read said WinCo Foods had a strong cash position and a good credit facility to borrow from as needed to finance its expansion.
“Our employees own 84 percent of WinCo Foods, and the rest is owned by a venture capital group, that helped us with our restructuring a few years ago,” he said. The company’s employee ownership structure is known as an Employees Stock Ownership Plan, or ESOP.
In 2004, Endeavour Capital Funds invested $40 million in a recapitalization of WinCo Foods, according information posted on Stoel Rives LLP’s Web site, the Portland, Ore., -based business law firm represented Endeavour Capital in its acquisition of a percentage of the supermarket chain.
Messages left with Stephen Babson, Endeavour’s managing director in Portland, were not returned.
“Endeavour was introduced to WinCo management as a potential equity partner to assist in the buyout of a strategic investor and finance continuing growth in the store network,” the venture capital firm said in a profile posted on its Web site. “In 2004, Endeavour acquired a minority interest in the company alongside the ESOP, which is the majority owner of WinCo. During Endeavour’s involvement, the company has continued its rapid growth, with the addition of two 1 million square foot distribution centers and several new store openings each year.”
While the two-county region has an abundance of supermarket chains, WinCo Foods operates in a different way and is increasing its sales in a recession.
The discount warehouse grocery chain expects to boost its sales by $500 million for the fiscal year ending in late March, Read said. WinCo projects sales of $4.5 billion, up from $4 billion for the last fiscal year and $3.5 billion for fiscal year 2007.
Analysts say overall it’s a difficult economic environment for some chains and the challenge is to be able to attract consumers who are looking to stretch their food dollars.
Bruce Cohen, a retail strategist with San Francisco-based Kurt Solman Associates, said in a telephone interview that the supermarket business has changed dramatically due to the recession, which has forced consumers to change their shopping habits. For instance, from 2006 through late 2008 purchases were driven by convenience as consumers bought more prepared meals, branded items and premium goods, but the recession has caused consumers to look for values and price oriented purchases in an attempt to stretch their shopping dollars.
“Overall, store revenues locally and nationally are being challenged as consumers are making fewer trips to the grocery store,” Cohen said. “It’s expected that consumers will spend 20 percent less on groceries this year.”
Many moderate-income consumers that traded up to purchase goods at Whole Foods, Ralphs or Vons when the region’s economy was booming now shop at Wal-Mart, Costco or WinCo Foods, he said. Cohen said the challenge for WinCo Foods to continue its sales growth was to keep consumers coming back to its stores when the economy turns positive.
“We expect the economy to be very tough in 2010,” he said. “WinCo’s bottom line should continue to benefit from the weak economy and changes in shopping habits. It’s trial and repeat in the supermarket business. Consumers will try WinCo Foods, but business is made in repeat visits.”
On Oct. 19, WinCo opened its eighth Inland location in Hemet. The warehouse-style store is 94,000 square feet and employs approximately 225 individuals, the company said.
As customers enter the store they’ll see a large “Wall of Values” featuring special low pricing on a wide variety of popular items that are placed on heavy metal racks. Read said its bulk-food section is filled with more than 600 items, such as pet food, coffee, flour, and candy.
The store also features “hot price” items in the first two rows. He said the Hemet store is different from other local supermarket chains because of its size and selection.
He said inside store aisles are stocked in traditional patterns, and each store features a bakery, produce department, deli, seafood and meat counter. The warehouse-style chain doesn’t offer loyalty cards and unlike other supermarket chains, the store’s telephone number can’t be found in local telephone books, but is printed on store receipts.
Employees will answer customer questions over the telephone, but will not offer price quotes, he said. The Hemet store is managed by Raul Garcia, a 13-year employee who has worked in several stores before transferring to Hemet from Temecula where he served as store manager, the company said.
Steve Harding, Hemet’s assistant city manager, said local officials didn’t offer WinCo Foods any tax incentives or lobby the company to open its store, but did assist the grocery chain through the building and planning phase, including assistance with the city’s permitting process.
“The store has been packed since it opened,” Harding said. “The store just really took off. The city really had nothing to do with attracting WinCo Foods … supermarkets usually locate in an area that they feel is not being served. However, we are (pleased) about the local jobs the new store has created.”
Located at 4602 W. Florida Ave, WinCo Foods faces local competition from a half dozen other big-box retailers and grocery chains, including Vons, Target, Wal-Mart, Grocery Outlet, Albertsons and State Bros.
Headquartered: Boise, Idaho
Locations: The employee-owned discount supermarket chain operates 29 stores in California, including eight in Riverside and San Bernardino counties.
Rankings: Forbes magazine ranks WinCo Foods as the 114th largest privately held company in the nation.
Web site: http:/// www.wincofoods.com
Company Overview: WinCo Foods LLC operates a chain of supermarkets. It offers groceries, meat and produce, bakery, bulk foods, and deli. The company was formerly known as Waremart Food Centers and Cub Foods. WinCo Foods was founded in 1967 and has stores in Washington, California, Idaho, Nevada, Oregon, and Utah. The company has more than 13,000 workers at 70 stores and four distribution centers.
By Chris H. Sieroty
Contributing Writer
California credit unions originated more than 12,500 primary mortgages, including purchases and refinances, in the second quarter of 2009, the highest level since the second quarter of 2004 and almost 2,000 more than the first quarter, according to a report by the California Credit Union League.
Based in Ontario, the CCUL said California credit unions originated more than $7.3 billion in loans in the second quarter, up from $7.1 billion in the first quarter of the year.
In Inland Southern California loan volumes were mixed as credit unions in San Bernardino County originated 92 primary mortgages in the second quarter for more than $16.2 million, compared to 108 loans for more than $12 million in the first quarter. In Riverside County both primary loan numbers and capital outlay were down in the second quarter. The CCUL reports 542 loans were made in the second quarter for more than $9.3 million, compared to 708 loans for more than $12 million in the first quarter.
“We are still seeing credit unions approving primary loans in the region,” said Daniel Penrod, senior industry analyst with the CCUL. “I expect the number of home sales will increase but home prices will continue to decline because there are still a lot of foreclosures and short-sales available. Things will level off near the end of the year.”
Despite, the region’s high unemployment rate and stagnant real estate market, Penrod told The Business Press that credit unions are seeing an increase in deposits as customers view credit unions as conservative and a safe lending institution compared to major financial institutions.
But Inland credit unions have not been immune to the financial problems brought about by sour real estate loans that have forced the Federal Deposit Insurance Corporation to seize local banks and sell their assets to more stable financial institutions.
In the High Desert, the National Credit Union Administration has seized two credit unions and sold their assets and liabilities to Alaska USA Federal Credit Union.
In June, Alaska USA purchased certain assets and liabilities of High Desert Federal Credit Union in Apple Valley in a deal valued at about $100 million, according to a company executive. The sale came after the NCUA had been overseeing the operations of High Desert since Oct, 16, 2008, when the federal agency placed the struggling credit union into conservatorship.
Three months after it acquired High Desert, Alaska USA took over The Members’ Own Federal Credit Union in Victorville in a deal valued at approximately $80 million, according to the NCUA. The Anchorage-based credit union now owns five local branches, servicing a combined 22,000 members.
“The acquisitions are part of our strategy of expanding our business into areas where we feel like there is an opportunity to grow our business model,” said Dan McCue, Alaska USA’s senior vice president, corporate administration. “San Bernardino County is a good sized area with lots of opportunities.”
McCue said the credit union’s business model was based on attracting deposits along with offering other business lines, including mortgages, trust services, business services and insurance.
In terms of originating primary mortgages, McCue said even in a recession Alaska USA would continue to do business in the Inland Empire.
“We are looking for loans,” he said. “We are making decisions on a case-by-case basis, but we are trying to offer mortgages and other loans to our members. I’ve been told that customers are happy we are in the region, because some credit unions had stopped lending money.”
While Alaska USA is relatively new to the two-county region, Altura Credit Union and Arrowhead Credit Union are well known brands locally.
Mark Hawkins, president and chief executive of Altura Credit Union, said the loan totals seemed low and attributed the CCUL’s figures to loans made by local credit unions and placed on their books and not packaged and sold on the secondary market. Based in Riverside, Altura is a state-chartered credit union with 14 branches, 110,000 members and $908 million in assets.
“So far this year, we’ve made about $100 million in loans,” Hawkins said. “In most cases we are not putting the loans on our books. We are packaging them and selling them on the secondary market. We can do a lot more business by packaging our loans.”
Altura Credit Union is expected to issue $11 million in primary mortgages in October. Hawkins said most of the mortgages approved have been for “purchase activity” and not refinances.
“It’s a tough time when it comes to refinancing,” he said. “Most people can’t qualify for refinancing, because they’ve lost the equity in their homes.”
It’s also been a difficult time for Altura in terms of loan losses, which has forced the credit union to use staff to modify mortgages to keep people in their homes. Hawkins said the credit union lost money for the first five months of the year but in each of the past five months has reported a profit.
For the six months that ended June 30, Altura reported a loss of $3.5 million, but for the third quarter it reported a $1.8 million profit.
“We will be profitable for the fourth quarter, but we expect to report a loss for the fiscal year,” Hawkins said. “But any positive trend is extremely welcome.”
Larry Sharp, president and CEO of Arrowhead Credit Union, said his company would not be profitable this year because of heavy loan losses.
“Last month we reported a $94,000 profit, though it won’t be enough to make up for earlier losses,” Sharp said. “We will be profitable in 2010 and 2011 on a year-to-year basis. We have turned the corner, and things are beginning to stabilize.”
Despite reporting loan losses, Sharp said Arrowhead was actively lending and putting those loans on the firm’s balance sheet.
“We are not going to the secondary market,” he said. “We feel like it’s a good time to be making home loans, especially with yields down in other lending. Since December, delinquencies have been going down, but consumers are still skeptical about how slow things are turning around.”
Gene Shabinaw, Arrowhead’s senior vice president of lending, said the company had set aside $68 million for loans, with a portion designated for real estate transactions. In terms of returning to making a profit from home loans, he acknowledged the company had “dipped into the red and is starting to come out the other end.”
Sharp agreed, saying Arrowhead will benefit from working with some of the region’s largest employers, from local school districts and county governments to Stater Bros.
“Our members are mostly employed by some of the largest employers in the area,” he said. “Many of these agencies and companies have begun to settle down in terms of layoffs, while the general community hasn’t settled yet. We will benefit from (that stability).”
Based in San Bernardino, Arrowhead Credit Union, a state-chartered institution, operates 24 branches, with more than 162,000 members and $979 million in assets.
CREDIT UNION INDUSTRY BRIEFING
During a recent hearing held by the U.S. Senate Banking, Housing and Urban Affairs Subcommittee on Financial Institutions, Debbie Matz, chairwoman of the National Credit Union Administration, said it was a challenging time for credit unions, and predicted that the number of troubled credit unions would probably increase through at least early 2011.
“Credit unions have not been spared harsh effects of the economic downturn and have a difficult road to travel in 2010 and beyond,” Matz told lawmakers at the Oct. 14 hearing on the condition of the financial services industry. In response to the challenging environment, she said the “NCUA has enhanced our supervision, shortened the examination cycle, increased the number of examiners and upgraded risk-management systems.”
She said that as of Sept. 30 there were 66 credit unions with assets over $100 million with a CAMEL 4 or 5 rating, compared to 12 in 2007. Overall, there are 326 such credit unions, representing 4.9 percent of all credit union assets.
According to the NCUA, a CAMEL rating is an internal rating system used for evaluating the soundness of credit unions on a uniform basis, the degree of risk to the National Credit Union Share Insurance Fund (NCUSIF), and for identifying those institutions requiring special supervisory attention or concern.
Matz said one of the bright spots is the “savings flight to quality” caused a 16 percent annualized increase of member deposits during the first half of 2009.
By Chris H. Sieroty
Contributing Writer
A steady stream of financial institutions nationwide have collapsed over the past year as a result of the country’s economic crisis and millions of dollars in soured real estate loans. As of Oct. 2, the Federal Deposit Insurance Corp. had taken over 98 banks both large and small across the country.
That figure compares with 26 banks seized last year and just three in 2007, according to statistics compiled by the FDIC. In Inland Southern California, four community and business banks — 1st Centennial, PFF Bank & Trust, Temecula Valley Bank and Vineyard Bank — have been shuttered since November 2008, and analysts expect additional small and midsized financial institutions to be taken over by the federal agency before the two-county region’s economy begins to recover late next year.
“California banks have probably been hit harder than banks in most other states due to the decline in the real estate market,” said Beth Mills, vice president of communications with the Sacramento-based California Bankers Association. “Additional banks being seized by the Federal Deposit Insurance Corporation is inevitable. It’s going to be a tough environment over the next year to year and a half.”
Mills said despite the adverse economic conditions, the majority of community and business banks in the Inland Empire “are well-capitalized and have enough capital to withstand the downturn.”
In total, the four Inland Southern California community banks seized by the FDIC cost the federal agency $1.897 billion. But those financial institutions that remain have been looking to take advantage of the fallout to increase their market share and total assets, according to several bank presidents interviewed by The Business Press.
“The recession wiped out a lot of the competition,” said Gary Votapka, president and chief executive officer of Temecula-based Mission Oaks National Bank. “I’m not happy about that. It’s not the way you’d like to increase your market share.”
Votapka said Mission Oaks has seen a fair amount of new business since Temecula Valley Bank was seized by regulators on July 17 and was taken over by First Citizens Bank of Raleigh, N.C. He explained that many of their new clients wanted to continue doing business with a smaller, independent business bank.
Ralph Wiita, president and chief executive officer of Golden State Bank in Upland, agreed, saying they’ve had a good opportunity to increase market share, particularly following the collapse of PFF Bank & Trust and Vineyard Bank.
“Our opportunity to increase our market share lies with attracting customers who want to work with a community bank and not a large financial institution like the banks that have taken over several local banks,” Wiita said. “We also have a one-on-one marketing effort. We have been calling offices and soliciting business, while following up on referrals and participating in networking opportunities with social organizations, chambers of commerce and rotary clubs.”
For the second quarter, Mission Oaks National Bank reported a net loss of $3.84 million, or 85 cents per share, compared with net earnings of $158,000, or 4 cents per share, for the same period a year earlier. In the first six months of 2009, Mission Oaks lost $6.39 million, or $1.42 per share, compared with net income after taxes of $461,000, or 10 cents a share, in the corresponding 2008 period.
Results from the second quarter and year-to-date of 2009 are exclusive of any credit for income taxes while the results from the second quarter and year-to-date of 2008 included tax provisions of $80,000 and $261,000, respectively, the company said in a regulatory filing with the U.S. Securities and Exchange Commission.
The earnings decline was primarily attributed to increased contributions to loan loss reserves, which totaled $3.61 million in the second quarter and $5.97 million year-to-date. That compares with provisions for loan losses of $534,000 in the same quarter and $786,000 in the year-to-date results a year ago, the company said.
Votapka said second-quarter results were impacted by a $3 million write-down on a secured real estate loan that became “impaired” during the quarter.
As of June 30, the company had total assets of $218 million, up $6.8 million, or 3.2 percent, over what was reported a year ago. Total deposits in the second quarter were $182.3 million, a 13.8 percent growth from the same period a year earlier.
He said the bank remains well-capitalized under regulatory guidelines. Mission Oaks National Banks has $25.5 million in equity capital, according to the FDIC.
“The biggest issue for our bank and banks in the Inland Empire is the devaluation of real estate holdings and the effect it’s having on our balance sheets and earnings,” Wiita said.
Golden State Bank has $160 million in assets and operates two branches in Upland and Brea. The collapse in real estate values has caused the company to swing from a profit of $600,000 in 2007 to a loss of $9.2 million from January 2008 through June, he said.
“The bank is padding its capital fund internally,” he said. “Our losses are all related to our real estate portfolio. We don’t see any more losses and our (third quarter) earnings are much improved.” Golden State Bank was scheduled to release its third-quarter earnings on Oct. 19.
Wiita stressed that the company’s “core operating earnings are profitable and have been profitable all along.”
The bank, which was founded in 2003, has a diverse loan portfolio with about one-third small-business loans; one-third commercial, office, industrial and real estate construction loans; and one-third real estate business loans. He said real estate business loans were dominated by specialty loans to fast-food restaurants, convenience stores and gas stations, all businesses that tend to do well in recessions.
Wiita said Golden State Bank has been more selective in making loans because the risk exposure is “bigger” in a recession.
“One of the challenges in this economy is to maintain higher reserves and capital level,” said Kevin Farrenkopf, president and chief executive of the Bank of Hemet. “Our goal has been to increase our capital reserve level, which we did through earnings. As of June 30, we had earnings of $3 million for the first six months of the fiscal year.”
The bank has $37.8 million in total capital, according to the FDIC. Based in Hemet, the bank has six branches and focuses on lending to small businesses and income-producing real estate.
Farrenkopf said the bank opened a permanent branch in Beaumont in September but will likely not expand this year or in 2010.
“We’ve been there for over a year, but we just recently opened a new, permanent branch,” he said. “Our company was originally attracted to Beaumont because there were no other community banks in the area. We also thought in was an underbanked area.”
Both Wiita and Votapka said that Golden State Bank and Mission Oaks, respectively, have no plans to expand their companies through opening of new branches.
