Pacific National Bank reported its first annual profit since opening its doors four years ago, posting net income for 1985 of $331,000. contrasted with the previous year's loss of $464,000.
"The feeling is extremely good," said Donald L. Solsby, president of the Newport Beach-based bank. "This is the Orange County bank that a lot of people thought was getting into trouble, but we're not. Even the banking regulators called and said they were pleased by our performance in 1985."
By the end of the year, Pacific National had increased its total deposits 7.6% to $52.3 million from $48.6 million a year earlier. Total loans increased 4% to $34.3 million from $33 million.
Its assets at the end of the year increased 8.6% to $56.6 million from $52.1 million. Solsby said the bank's capital and reserves were $4.4 million, or 7.7% of assets, well above the 6% ratio that federal regulations require. The ratio at the end of 1984 was 6.9%.
To turn the bank around, senior managers initiated a major cost-cutting program last year, forgoing salary increases but avoiding layoffs, Solsby said.
"We had the same number of people, but they were just working harder and more efficiently," Solsby said.
At the same time, the bank set up a more competitive fee system to attract more customers. And its mortgage division increased fee income by brokering loans, he said.
The bank's performance pulled up the consolidated net income of its parent holding company, PNB Financial Group, to $136,000, contrasted with the previous year's loss of $558,000.
The cost to PNB of hiring a consultant to review expanded banking activities, including mortgage banking, and to investigate other business opportunities for the holding company was the main reason for the lower consolidated earnings, Solsby said. PNB also incurred costs in raising $1.2 million in a public stock offering.
Pacific National Bank, which opened Jan. 29, 1982, lost $628,000 in its first 11 months and an additional $1.3 million in 1983, its first full year of operations.