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SUMITOMO BANK OF CALIFORNIA $75 MILLION PREFERRED STOCK RATED 'A-' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, March 9 /PRNewswire/ -- The Sumitomo Bank of California's proposed $75 million non-cumulative preferred stock is rated A-' by Fitch. The credit trend is declining. The rating is based on the backing of parent Sumitomo Bank, Ltd., good operating efficiency, and a solid franchise in the Asian-American deposit and lending markets. Proceeds from the issue will help boost the Tier 1 capital of Sumitomo Bank of California as well as its parent. The bank has no other outstanding preferred stock.
 Key to the rating is support of the parent, Sumitomo Bank, Ltd., Japan's third largest bank with consolidated assets of 61.7 trillion yen, equivalent to $464 billion. Fitch assigned a structured transactions rating of AA-/F-1+' to Sumitomo Bank, Ltd. Because of its comparatively stronger capital position, Sumitomo Bank is under less pressure than other Japanese banks to contain asset growth overseas.
 Investors enjoy protection under a keepwell agreement that ensures the California bank's solvency. Sumitomo Bank is required to maintain the subsidiary's Tier 1 and total risk-adjusted capital in excess of 6 percent and 10 percent, respectively. As of year-end 1992, Tier 1 capital equalled 6.80 percent of risk assets. With the issuance of this preferred stock, the Tier 1 capital ratio will rise to 7.86 percent.
 The keepwell also provides for the bank's liquidity. Upon the request of California management, Sumitomo Bank will advance funds if Sumitomo Bank of California's cash and other liquid assets are insufficient to meet all obligations. As long as the preferred stock is outstanding, Sumitomo Bank will retain a majority interest in the California subsidiary. Currently, Sumitomo Bank holds 72.5 percent of the outstanding common stock of Sumitomo Bank of California.
 As of year-end 1992, 69 percent of Sumitomo Bank of California's total loans were related to commercial and residential real estate. Loans secured by hotels and motels represented 18.4 percent of the total portfolio as of year-end 1992. Although credit policies provide for conservative loan to value ratios and high cash flow coverage requirements, weak real estate markets and rising business failures throughout the bank's major markets are likely to exacerbate loan quality pressures. As of year-end 1992, nonperforming assets equalled 3.75 percent of loans, up from 2.07 percent a year earlier.
 As management reappraises loan collateral, problem loan levels could rise requiring higher provisions. Loan loss reserves covered 61 percent of year-end 1992 nonperforming assets. While coverage is rather thin, concerns are mitigated by parent support. With total assets of $5.4 billion as of Dec. 31, 1992, Sumitomo Bank of California is the state's seventh largest bank and the fourth largest Japanese-owned bank in California.
 -0- 3/9/93
 /CONTACT: Ricardo J. Kleinbaum, 212-908-0525 or Scott J. O'Donnell, 212-908-0531, both of Fitch/


CO: Sumitomo Bank of California ST: California IN: FIN SU: RTG

WB -- NY048 -- 4511 03/09/93 12:05 EST
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Publication:PR Newswire
Date:Mar 9, 1993
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