By Lenny Roberts
Ojai’s Los Padres Bank was one of 14 branches closed Friday by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation as receiver.
According to a press release issued Friday, the FDIC entered into a purchase and assumption agreement with Pacific Western Bank, San Diego, to assume all of the deposits of Los Padres Bank based in Solvang to protect the depositors.
Tom Farmer, vice president of business development, said it’s business as usual, and the bank’s five full- and part-time employees will remain.
“We don’t anticipate any staff changes at all,” Farmer said Tuesday afternoon. “Pacific Western is a strong bank. It’s the 14th largest commercial bank in the state, and we’re very optimistic. I’m excited about this.”
All 14 branches of Los Padres Bank reopened Monday as branches of Pacific Western Bank. Depositors of Los Padres Bank will automatically become depositors of Pacific Western Bank, and will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage. Customers of Los Padres Bank should continue to use their existing branch until they receive notice from Pacific Western Bank that it has completed systems changes to allow other Pacific Western Bank branches to process their accounts as well.
Depositors of Los Padres Bank can access their money by writing checks or using ATM or debit cards, and checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.
As of June 30, 2010, Los Padres Bank had approximately $870.4 million in total assets and $770.7 million in total deposits. Pacific Western Bank will pay the FDIC a premium of 0.45 percent to assume all of the deposits of Los Padres Bank. In addition to assuming all of the deposits of the failed bank, Pacific Western Bank agreed to purchase essentially all of the assets.
The FDIC and Pacific Western Bank entered into a loss-share transaction on $579.8 million of Los Padres Bank’s assets. Pacific Western Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers.
The FDIC estimates that the cost to the Deposit Insurance Fund will be $8.7 million. Compared to other alternatives, Pacific Western Bank’s acquisition was the least costly resolution for the FDIC’s DIF. Los Padres Bank is the 117th FDIC-insured institution to fail in the nation this year, and the eighth in California. The last FDIC-insured institution closed in the state was Butte Community Bank, Chico, which also closed Friday.