Economy

Sacramento-area banks face stiff test in 2009

The Sacramento region's banks so far appear to be weathering the national recession.

But they will be tested this year as defaults shift from residential real estate, which hit big banks worst, to the commercial real estate and small-business sectors – where many local banks are heavily committed.

"I think most banks are going to see some deterioration in that piece of their portfolio in 2009," said Stephen Fleming, president and chief executive of Sacramento's River City Bank.

In the third quarter of 2008, though, Fleming's bank improved its financial footing. River City's Texas Ratio, one measure of an institution's capacity to deal with bad loans, dropped by nearly half. The bank reworked some troubled loans, wrote off others and socked away funds against future losses, Fleming said.

Read the complete story at sacbee,com

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