Culminating half a decade of real estate writedowns, Capital Corp of the West announced late last month it would take a one-time writeoff of its remaining equity investments in two troubled real estate developments.

In 1995, which included the latest writeoff, the $200 million bank holding company wrote off a whopping $2.9 million of the investments.

Capital Corp, the holding company for County Bank, Merced, Calif., said the decision was reached after analysis of the status of real estate properties owned by another subsidiary, Merced Area Investment and Development Inc.

Capital Corp had already written off about $400,000 earlier in 1995, before opting to write off its remaining real estate assets, which were valued at $2.5 million. The final writeoff brings to an end four years of writedowns totaling $5.4 million.

The move will reduce after-tax earnings for Capital Corp by about $1.5 million, leaving the company with a $330,000 profit in 1995.

"Any time you talk about a writedown of that size, it's not something you take lightly," said Tom T. Hawker, president and chief executive of the $200 million-asset County Bank. "But on balance, we felt it was a positive move in both the short-term and the long-term to take care of this."

The move shows how much the real estate debacle in California in the early 1990s continues to haunt community banks. Smaller banks in the state were the hardest hit, and more than two dozen failed in 1993.

County Bank, based in California's Central Valley, has watched real estate prices in the area drop steadily since the early 1990s. The closing of Castle Air Force Base cost the region 6,000 jobs, and Mr. Hawker said land values have fallen 15% to 30%.

"What had happened was that we'd been taking writedowns for the past four years as the market continued to drop," Mr. Hawker said. "Finally, we decided it was time to put this behind us."

Added chief financial officer Janey Boyce: "We felt very strongly that our stock price had been discounted for a long time because of the uncertainty with the real estate. Now we can go forward."

"You can look at County Bank now tangibly. There are no more question marks," said Marc Arnett, of Hoefer & Arnett Inc., San Francisco. "The real estate was a drain on the bank, and a lot of investors wavered because of it. Now, it's a much clearer picture."

Mr. Hawker said County Bank will continue to own the property, which is residential, and will sell it when the opportunity arises.

He said County Bank avoided dumping the property, which would have further depressed real estate prices in the region, and instead concentrated on writing off a portion of the real estate assets each year.

"As a result of this strategy, it has created uncertainty in the bank over the past several years," Mr. Hawker said.

Although the Federal Deposit Insurance Corporation Improvement Act required banks to divest itself of its real estate investment subsidiary properties no later than Dec. 19, 1996, County Bank recently received a five-year extension.

Despite the writeoff, County Bank has registered credible numbers. The bank's total assets represent a 15% increase from 1994, and capital at yearend 1995 was projected at close to $15 million.

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