TomatoBank Earns Highest Rating Again From
01/22/2008
Bankrate.com Star Rating: Safe & Sound CAEL Rating: 1G

Founded in 2000, TOMATOBANK, NATIONAL ASSOCIATION is a nationally-chartered commercial bank, which, as of September 30, 2007, reported $473.2430 million in total assets. At that date, loans and deposits held by the bank amounted to $373.2970 million and $374.5260 million respectively. Net worth, the difference between total assets and total bank liabilities, was determined to have been $67.9690 million which was 14.36% of total assets, as of September 30, 2007. For the nine months ended September 30, 2007, the bank recorded net income of $5.3750 million which represented a return on average assets (ROA) of 1.64%. Year earlier first nine months results amount to a net profit of $3.8400 million, or a 1.59% annualized ROA. An ROA of at least 1.0% is deemed satisfactory in accordance with banking industry standards. The industry ROA for the first nine months of 2007 approximated 1.2%.

Banking institutions are subject to regulatory assessments of profitability, asset quality, capitalization, and liquidity. We are of the opinion that, as of September 30, 2007, this bank exhibited a superior condition, characterized by normal overall, sustainable profitability, a very high measure of asset quality, very strong capitalization, and ample liquidity.

Our analysis of the institution's earnings performance to arrive at an overall, sustainable profitability rating looked at return on equity, asset yield versus funding expense, levels of noninterest income and overhead ratios. We have determined that, for the nine months ended September 30, 2007, the bank achieved an approximately average return on equity . A strong differential between asset yield and funding expense; below normal levels of noninterest income; and strict expense control evidenced by well below standard overhead ratios have combined to impact operations for the nine months ended September 30, 2007. We have noted that the bank's profitability improvement, between the first nine months of 2006 the the first nine months of 2007, well exceeded the banking industry peer comparison.

The bank reveals, as previously stated, a very high measure of asset quality. That conclusion incorporates our analysis of data depicting regional economic conditions as well as our computations of a relatively low September 30, 2007 nonperforming asset ratio; much better than normal reserve coverage for nonperforming loans; and apparently acceptable quality, or no greater than average, commercial real estate and construction loans, two categories that can intensify credit risk. Other asset categories, such as farm and consumer loans, which may carry more than usual default potential, should not have a substantial negative impact upon future results. Loan yield can measure financial reward versus credit risk. Excessive loan yield may be an indicator of existing or future problems. Our loan review indicates that the bank has assumed a seemingly prudent position between credit risk and financial reward. Likewise, for banking institutions, substantially higher than normal asset growth can be deemed speculative and can lead to financial deterioration. This bank exhibits such growth, which, if unrelated to merger activity, should be subject to further inquiry.

For the one year period ended September 30, 2007, the bank reported a strong rate of growth in equity capital. Balance sheet structural changes, through the one year period of time ended September 30, 2007, have possibly had a negative impact upon the bank's capital position. Our analytical methodology does take into account the quantity, quality, and durability of net worth, and, as set forth above, we have determined, based upon our series of tests, that the bank demonstrates very strong capitalization. We have calculated the bank's September 30, 2007 Total Risk-Based Capital position, a computation used by industry regulators, and have concluded that this bank substantially exceeded the requirement, set by regulation, for this test.

As of September 30, 2007 , the bank displayed moderate balance sheet liquidity and a no greater than average reliance upon wholesale, or non-core, liabilities, which include all borrowings such as Federal Home Loan Advances, and uninsured CDs greater than $100,000. Accounting principles require some securities to be categorized as "Available-for-Sale." Changes in market value of these securities are reflected in the GAAP (Generally Accepted Accounting Principles) net worth of the institution. Depending on market movement, the value of these securities may have a positive or negative effect on the institution's GAAP net worth. Based upon the bank's present balance sheet, changes in the value of the current level of securities reported as "Available-for-Sale" might not have a substantial impact upon future net worth of the bank.

TomatoBank (www.tomatobank.com) is Los Angeles' dynamic, leading multi-ethnic bank.