SAN LORENZO VALLEY — Liberty Bank, which suffered losses and came under regulatory scrutiny after the economy crashed, has earned an upgrade to four stars signifying excellent as of Sept. 30 by Bauer Financial, the independent rating service.
Based in South San Francisco with offices in Palo Alto, Felton and Boulder Creek, Liberty Bank signed an agreement with the Federal Reserve Bank in October 2011 to deal with problem loans.
That year, Liberty Bank was downgraded by Bauer to two stars signifying problematic after posting a quarterly loss of $2.8 million with 8 percent of its loans delinquent.
Under Philip LaChappelle, former chief at First Asian Bank in Las Vegas who replaced Larry Woods as president, Liberty Bank posted a 2012 profit of $850,000.
This year, profits have been smaller — $99,000 through three quarters — but growing a little larger each quarter.
The third quarter profit was $41,000 with delinquent loans down to 1.5 percent of its portfolio, according to Bauer Financial.
Assets total $223 million, up from $212 million a year ago, according to Banktracker, a project of the American University School of Communications, with loans at $134 million, up from $121 million, and troubled assets $3.3 million, down from $7.7 million.
“We cleaned up the balance sheet and are working to put high quality loans on the balance sheet,” said Tom Amendola, senior vice president and chief financial officer at Liberty Bank.
“We’re in compliance in the (regulatory) orders and are optimistic they will be lifted soon,” he added.
He said the bank brought on new employees “good with working with borrowers” and is keeping a tight rein on operating expenses, evaluating vendors and putting services out to bid.
In September, Bruce Farrell, who spent 25 years with Borel Private Bank & Trust in San Mateo, joined Liberty Bank as senior vice president and commercial loan officer.
“Our focus has been trying to get commercial real estate deals,” Amendola said. “We’re focusing on relationship banking, looking for loans and deposits in San Lorenzo Valley and South San Francisco.”
He sees the economy improving, albeit slowly, and finds people “still being really cautious” with little sense of urgency because the Federal Reserve is committed to keeping interest rates low.
He emphasized Liberty Bank is ready to lend although it does not offer loans backed by the U.S. Small Business Administration. Those loans are available at competing banks.
“We do have money to lend, and we want to lend it in the community,” Amendola said. “The community has been there for us.”
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3Q Bauer ratings
Banks Rating 9/30/13 6/30/13 Assets YTD Income Nonperforming
Bank of America 3 1/2 stars 3 1/2 stars $1.4T $12.9B 3.4%
Bank of the West 5 stars 5 stars $59.7B $429M 1.1%
Citibank 4 stars 4 stars $1.3T $11.1B 1.1%
Comerica 5 stars 5 stars $62.8B $458M .8%
JP Morgan Chase 3 1/2 stars 3 1/2 stars $1.9T $10.6B 1.4%
Liberty Bank 4 stars 3 1/2 stars $218M $99,000 1.5%
Lighthouse Bank 5 stars 5 stars $163M $1.7M .2%
Rabobank 3 1/2 stars 3 1/2 stars $12.8B $42M 2.4%
Santa Cruz County Bank 4 stars 4 stars $396M $2.5M .9%
US Bank 4 stars 4 stars $337B $4.4B 2.2%
Union Bank 5 stars 5 stars $98.9B $458M .8%
Valley Community Bank 2 stars 2 stars $147M ($275,000) 4.9%
Wells Fargo 3 1/2 stars 3 1/2 stars $1.3T $14.2B 3.5%
Credit unions Rating 9/30/13 6/30/13 Assets YTD Income Nonperforming Bay Federal 3 stars 3 stars $694M $4.7M .9%
Monterey No rating No rating $208M $1.3M .4%
Patelco 5 stars 5 stars $4B $48M 1%
Santa Cruz Community 3 stars 3 stars $106M ($70,000) 2%
Santa Cruz County Employees 3 stars 4 stars $27M ($1,000) .3%
Watsonville Hospital 4 stars 4 stars $12M $13,000 .3%
5 stars: Superior
4 stars: Excellent
3 1/2 stars: Good
3 stars: Adequate
2 stars: Problematic
Source: Bauer Financial