After taking a pounding from the fast-falling economy and tough-minded regulators this year, community banks in the Tri-Counties are beginning to think they’re at the bottom.

But it’s too early to say if the Tri-Counties are in the recovery phase. That’s the view of four top regional bank chief executives who spoke at a Sept. 22 forum at the Ronald Reagan Library in Simi Valley. The forum was hosted by California Lutheran University and several hundred corporate leaders and competing bankers attended.

Pacific Capital Bancorp Chief Executive Officer George Leis said that community banks such as his didn’t dabble in the exotic financial instruments at the heart of the global banking crisis. Instead, what Santa Barbara Bank & Trust’s parent experienced during the past year was “a complete disruption of the real estate market, where appraisal values fell off a cliff,” Leis said.

Janet Garufis, CEO of Montecito Bank & Trust, said a lingering problem is loans that are “performing non-performing loans” where borrowers with solid credit history are making payments on time but where the value of real estate has fallen so much that regulators are questioning whether the loan needs to be written down.

Writedowns and other actions being ordered by regulators are really hurting net profit margins, said Lynda Nahra, CEO of Community West Bank in Goleta. “We’re getting speeding tickets (from regulators) for driving 30 miles an hour,” she said.

With regulators talking about creating two classes of banks, those “too big to fail” and community banks whose product offerings will be fairly limited, the “financial services industry will be dramatically changed,” said Jim Nerland, CEO of California Oaks State Bank in Thousand Oaks.

The bankers were guarded about when things might actually turn around. “Regulators are really requiring banks to step up capital and liquidity,” Leis said.

Garufis said she saw some glimmers of hope in customers whose credit quality is improving.

But the panel agreed that the commercial and residential real estate markets, which make up the bulk of their problem loans, have not yet begun a full-blown turnaround.