Lower overhead and the elimination of a branch office helped First American Bank & Trust in Laguna Beach post net income of $45,420 for the second quarter, compared to a loss of $47,995 for the same quarter last year.
In the first six months, the bank nearly doubled its net income to $88,516, from $45,876.
First American lost a total of $1 million in 1984 and 1985, primarily on real estate loans. But Jess Barrera, the bank's newly hired president, said that the loans were written off in last year's fourth quarter and that the final parcel of foreclosed real estate the bank owned was sold in the first quarter this year.
"I think we've turned the corner," Barrera said. "Our loan loss reserve is real strong, the uncertainty over the value of (foreclosed) real estate owned is gone and we're no longer dependent on fee income anymore to make a profit."
First American's assets were $25.4 million as of June 30, up less than 1% from $25.2 million a year earlier.
But loans increased nearly 14%, to $18.2 million from $16 million. Deposits went up 3%, to $23.7 million from $23 million.
And the bank's ratio of capital to assets, which had slipped by the end of the year below the 7% level required by regulators, rebounded to 7.4% at the end of the first six months, Barrera said.