While giant banks such as Bear Stearns implode as an indirect result of the housing crisis, many of the community banks based in the Northern San Joaquin Valley report being largely insulated from such upheavals.
That's true even after last week, when Merced-based County Bank announced a $4 million loss in 2007, and then saw its stock lose more than half its value in one day before rallying late in the week.
Jeff Burda, president of Modesto Commerce Bank, said most community banks don't make many home loans, including the subprime loans that prompted the recent housing meltdown.
But some banks, like Bear Stearns, did invest in securities made of subprimes, he said, so their fortunes have tumbled as those loans have failed.
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Other banks, like County Bank, may have avoided subprime securities, but made substantial loans to commercial builders. With new housing at a virtual standstill, those builders aren't building, Burda said, and loans aren't being paid.
The chief executive officer of Lodi-based Farmers & Merchants Bank of Central California said his bank has thrived because of a conservative philosophy.
"Most commercial banks took no subprime mortgages, and their securities are diversified," said Kent Steinwert of Farmers & Merchants, which has 23 branches from Sacramento to Turlock.
"The decisions are made locally," he said.
But bad news about banks big and small last week made customers nervous. Thursday morning, after County Bank made its loss announcements, Modesto Commerce received several calls from worried customers, Burda said.
He noted that County Bank's directors had signaled for several weeks that they expected to report negative news.
So County Bank's announcement was not surprising to banking insiders such as Burda, but was jarring to consumers. "To them, it comes out of the clear blue," he said.
Credit agencies that monitor banks over time on the basis of criteria such as earnings and liquidity take a more measured stance.
Bankrate.com, a consumer finance Web site, gave five valley community banks, including County, Bank of Stockton and Farmers & Merchants, ratings of three or four stars -- the same ratings most banks receive, with five stars being the best, according to the site.
Burda said his bank and others are affected in an indirect way by the housing slump and corresponding credit crunch.
He said he's seen more car loan delinquencies, and other loans also are underperforming because interest rates have fallen.
In Sonora, Mother Lode Bank's chief credit officer, Bob Daneke, said his 3-year-old bank also stayed out of risky loans.
There, commercial loans are more likely to go to builders who put up only a few homes, rather than a large development, Daneke said.
"You don't see the investors getting into those homes as much," Daneke said. "We tend to know each of our clients really well."
Officials with another valley-based bank, Oak Valley Community Bank in Oakdale, did not return calls seeking comment.
Burda said his bank's parent, Bank of Stockton, benefits by not having its stock traded publicly, unlike Capital Corporation of the West, the holding company for County Bank.
That's allowed Bank of Stockton to sock away reserves far above what accountants might prefer, he said, to help the bank through an economic downturn. That's money stockholders otherwise might want to see in the form of a dividend.
Still, Daneke and Burda said County Bank's woes shouldn't cause panic among customers of that bank or others.
Far more banks failed during the economic downturn of the early 1990s, Burda said. And deposits are federally insured, so if a bank fails, account holders are covered.
Daneke added that over its 30-year history, County Bank has established a strong reputation within banking circles, and that reputation has merit.
"You never like to see those things at a well-regarded bank," he said. "But they still appear to be a pretty well-capitalized bank."