Bank holds no residential mortgages, and has invested conservatively.
As fears spread across the Unites States regarding the sub-prime mortgage fallout, Mission Valley Bank is reporting that, while the financial industry as a whole is in the midst of tough times, they are well prepared to handle the challenges of today’s market conditions.
“The bank is doing extremely well, given the current economic environment,” said Tamara Gurney, President and CEO of Mission Valley Bank.
One of the reasons for this is that Mission Valley does not provide residential mortgages and they have no concentration of construction and land development loans. They instead concentrate on small and large businesses, 90% of which are located within the footprint of their branches in the Santa Clarita and San Fernando Valley.
The big problems in the banking industry are centered around banks that heavily relied on “sub-prime” mortgages.
“Sub-prime” defines the practice of lending to clients that are less qualified than a bank’s ideal borrower. In the past this has meant those who have FICO scores lower than 650, or even those who may have had a bankruptcy.
In fact, sub-prime mortgage lending has been around for many years, but was grossly abused and mismanaged during the housing market’s upswing. Some lenders loosened their requirements of borrowers, and lent them money based on their stated income, without verification.
Another reason Mission Valley bank has continued to hold strong is their conservative investment approach.
“We don’t try and hit home runs,” Gurney said. “We just try to go out there, hit singles and doubles, and score.”
That strategy has been a part of Mission Valley bank since they opened in 2001.
“You know, we’re sticking to our knitting, as my grandmother would say. We had a business plan when we started, we’re active in the community, and we’re fairly conservative and so I think that’s how we’ve managed to pull it off.”
In the 7 years the company has been in business, they have seen double digit growth every year, and even reported an increase in net income for 2007, as compared to 2006. In the last five years their stock has split four times, and is still trading above the book value. Book value, in stock terms, refers to the shareholders’ equity.
Gurney believes that while times are tough, the Santa Clarita Valley will make it through.
“I think the valley as a whole is holding up much stronger than a number of other areas across the state and even the nation.”