San Francisco's National American Bank was released from its regulatory marching orders and has started to crank out profits again, rounding out a recovery for nearly all of the city's small banks.
San Francisco's small banks were the hardest-hit group of city-based banks in California's real estate crunch in the early 1990s.
Hamstrung by high costs in one of the most expensive cities in the country, 11 of the city's 19 banks with less than $1 billion in assets lost money in 1992. Real estate loans were the cause.
Today, only two small San Francisco banks are losing money. Several, however, are still operating under regulatory decrees.
After losing more than $1.5 million from 1992 through 1994, the $36 million-asset National American squeezed out a $35,000 profit in the first quarter, the latest for which it has reported.
In the second quarter, the Office of the Comptroller of the Currency lifted its order that the bank improve asset quality and credit review procedures.
"Reengineering is the right word," said Owen J. Erickson, a 27-year veteran of Bank of America who was brought in to turn the bank around in 1993. "What we had to do was reengineer the bank's cost structure and rewrite all the policies and procedures."
Though the 11-year-old bank has a huge 13.6% leverage capital ratio and is profitable, it still has a large load of nonperforming assets for a bank of its size. Fully 12% of its loans were not performing on March 31.
The bank is owned by members of the Taiwanese- and Chinese-American community in San Francisco. After signing an OCC consent decree in October 1992, the bank's board brought in an outsider - a rarity for California's ethnic banks - to fix the problems.
Mr. Erickson was a commercial lender for BofA in Asia for a number of years - in Hong Kong, Singapore, and Japan - but for three years until 1987 he had been manager of the bank's San Francisco region, he said.
He said making the switch to so small a bank was challenging, but, in the end, rewarding.
"I'm not going back into a big bank," he said. "I like it. In fact, it's what real banking is all about. After the last two years, I have a whole new respect for community bankers. They have to understand every phase of the business.
