The prolonged banking crisis hit close to home on Aug. 20 as the federal Office of Thrift Supervision shut down branches of Los Padres Bank, a financial institution headquartered in Solvang.
The Federal Deposit Insurance Corporation (FDIC) was named temporary receiver of the failed bank, in turn selling it to San Diego-based PacWest Bancorp—parent company of Pacific Western Bank—later that day.
All of Los Padres’ 14 offices—including locations in Santa Maria, Nipomo, and Buellton—reopened on Aug. 23 as branches of Pacific Western. Normal banking services weren’t disrupted during the transfer, and Los Padres customers were notified via the company’s website to continue using their existing branches, ATMs, and online accounts until further notice from Pacific Western.
“We welcome Los Padres Bank customers to the Pacific Western Bank family,” Matt Wagner, CEO of PacWest Bancorp, said in a press release. “We look forward to serving them with the best possible banking products, and providing them with the safety, strength, customer service, and convenience for which Pacific Western is known.”
Officials from the former Los Padres Bank hadn’t responded to requests for comment as of press time.
As of June 30, Los Padres Bank claimed total assets of $870.4 million, $770.7 million in total deposits, and $534 million in loans. PacWest assumed $823 million in assets and $751 million in deposits, paying a premium of 0.45 percent, according to the company. Pacific Western also agreed to buy all loans and assets owned by the failed bank.
PacWest Bancorp entered into a loss-share transaction with the FDIC for $579.8 million of Los Padres’ assets. The FDIC will absorb 80 percent of losses and share in 80 percent of loss recoveries. According to the FDIC, the agreement is projected to maximize returns by keeping assets in the private sector, and will minimize disruptions for loan customers.
The fifth-largest banking company in the tri-county area, Los Padres received a final cease and desist letter from federal regulators on July 26, warning officials to increase capital or be merged, acquired, or seized.
Los Padres is the 118th FDIC-insured bank to fail nationwide so far in 2010 and the 10th to do so in California. The bank lost $45.4 million in 2009 and reported a loss of $861,000 for the first half of 2010.
With the acquisition, PacWest Bancorp now boasts 82 branches in 10 counties statewide and total assets worth more than $6 billion.
This article appears in Aug 26 – Sep 2, 2010.