American Interstate Bank Begins to Post a Profit

Now that it has emerged from regulatory supervision in strong shape, American Interstate Bank in Newport Beach is beginning to post higher profit aad rebuild itself to climb toward its former size and position itself for interstate banking.

The bank reported Monday that its net income in the second quarter increased 53% to $69,000 from $45,000 in last year’s second quarter. Net earnings in the first six months likewise rose 53% to $95,000 from $62,000.

While the figures may not seem impressive, said John Engberg, the bank’s president, they represent the start of a clean slate. The bank succeeded last January in ridding itself of a 1981 regulatory order to increase its capital to 7.5% of assets. To free itself from the order, the bank has reduced its size and plowed its earnings over the years into capital, resulting in an 8.2% capital-to-assets ratio at the end of June.

American Interstate’s assets on June 30 stood at $52.5 million, a 14.5% drop from $61.4 million a year earlier. Assets had reached $68.7 million at the end of 1984.

“We’re resuming our growth with more loans and more deposits, and we expect to be back to $61 million in assets--or close to it--by the end of the year,” Engberg said. “We hope to grow over the next 2 1/2 to 3 years to $75 million to $80 million in assets.”

At the end of June, American Interstate’s net loans had fallen 16.2% to $36.6 million from $43.8 million, and deposits had dropped 16.3% to $47.1 million from $56.3 million.

The bank changed its name in 1984 from American State Bank and is now awaiting approval from the U.S. Patent Office to use its current name, American Interstate Bank, as a registered trademark nationally.

Engberg said the bank’s board figures that banking conglomerates that want to operate in every state may find both American Interstate and its name attractive and may want to buy both. A legislative bill to allow out-of-state banks to purchase California banks, however, is bottled up in the state Legislature.

The bank also said it has elected William M. Harrison chairman, replacing Raymond Haas, who resigned after he took a job with Bank of America. Harrison, 62, a board member since 1982, is vice president of Breuer and Harrison Inc., a Fullerton real estate development firm.