Feb. 3--Merced-based County Bank says its 39 branches are open for business, even as a landslide of operating losses and underperforming loans apparently threatens to bury it.

The bank and its holding company, Capital Corp of the West, issued a brief statement today reassuring its customers that money in checking, savings and money market and certificates of deposit are safe because they are insured by the Federal Deposit Insurance Corp. The bank participates in an FDIC program in which checking accounts are 100% insured regardless of the balance, while savings, money market accounts and CDs are insured to at least $250,000.

The statement comes on the heels of documents filed late Friday with the U.S. Securities and Exchange Commission in which bank officials warned that financial difficulties cast doubt on the company's survival. Preliminary financial results for 2008 show operating losses of about $96 million, compared with losing less than $3 million in 2007. From 2007 to 2008, the value of County Bank's non-performing loans -- loans that are either in default or close to default -- more than doubled, from $54 million to about $109 million.

Since July, Capital Corp has been under the gun to raise cash and improve its capital position after its primary regulator, the Federal Reserve Bank of San Francisco, dropped the bank's status from "well capitalized" to "adequately capitalized." Friday's statement declared that the bank expected its status to fall to "undercapitalized" under regulatory policies unless it can raise $75 million quickly.

But because no investment of that scale or a sale of the company is on the horizon, the company reported it is out of compliance with its regulatory agreements and warned investors and customers that "state and federal banking regulators may take further significant regulatory action."

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