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Eldorado Bancorp Posts 1st-Quarter Loss


LAGUNA HILLS — Eldorado Bancorp said Friday that it lost $2.4 million, or 88 cents a share, for the first quarter and suspended dividend payments as sinking real estate values caught up with Orange County's most consistently profitable bank.

The quarterly results were a sharp jolt for the company, which wrote down $3.4 million in loan values and socked away $1.8 million more for possible loan losses in the future.

The Laguna Hills company, which owns Eldorado Bank in Tustin, earned $749,000, or 27 cents a share, for last year's first quarter. Revenue for the latest three months fell 18% to $6.8 million from $8.3 million.

"Appraisals on real estate for our loans and on the real estate we own (through foreclosure) were written down, and that affects profitability," said J.B. Crowell, the company's president.

The problems centered on the the bank's loans for office buildings and other commercial property. Borrowers have had to lower rents to keep tenants, and that has caused the value of the properties and the loans to drop, Crowell said.

"We see our customers out there hurting," he said. "And if they're hurting, we're going to hurt."

Like many banks, Eldorado has also lost deposits to mutual funds and other uninsured investments that offer higher returns than insured savings and checking accounts that pay interest. That was part of the reason for an 11% drop in the company's assets to $321.9 million at the end of March from $363 million a year earlier.

A bright spot was a declining level of bad loans, which dropped to 1.3% of total loans from a high of 3.55% at the end of 1991. Regulators want banks to keep that figure below 3%.

The company had been paying a quarterly dividend of 8 cents a share but decided to suspend the payment until it returns to profitability. Crowell said Eldorado can make a profit this year if the economy remains flat. But if the long-running recession in Southern California gets worse, he said, everybody will be losing money.

The last time Eldorado posted a quarterly loss was in 1984. Since it opened in 1972, it has never posted an annual loss.

CommerceBancorp, the holding company for troubled CommerceBank in Newport Beach, was hit again by declining real estate values. The company, which has been in red ink for the past two years, reported a loss of $920,000, or 39 cents a share, for the first quarter. That contrasted with a profit of $232,000, or 10 cents a share, for the same period last year.

The once-stellar business bank set aside $360,000 for possible loan losses, wrote down the value of the real estate it owns by $250,000 and charged off $175,000 for losses at a unit it is winding down. The bank is operating under a federal cease-and-desist order that limits its actions.

The company sliced its loans and other assets 20% to $262.5 million at the end of March from $329.3 million a year earlier. The reduction was mainly an effort to help the bank comply with the federal order requiring that it maintain adequate ratios of capital to assets. That figure was 6.3% at the end of March, just shy of the 6.5% required by the order.

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