All four Security Pacific Bank branches in Los Angeles reopened this week as branches of Pacific Western Bank under an acquisition engineered by federal officials after Security Pacific was declared to be perilously undercapitalized. The Federal Deposit Insurance Corp. was named the receiver of Security Pacific last Friday after its closure by the California Department of Financial Institutions. The FDIC then announced it had entered into a purchase and assumption agreement with Pacific Western Bank of Los Angeles to assume all deposits of Security Pacific, whose four branches will reopen on today as Pacific Western branches.
Customers of the failed bank will automatically become depositors of Pacific Western, and their money will continue to be insured by the FDIC.
“All branches of Security Pacific Bank will reopen with no disruption in service,'' according to a California Department of Financial Institutions statement.
Security Pacific is the 19th American bank to fail this year, the third in California. The last bank to be closed in the state was Newport Beach-based First Heritage Bank, National Association, on July 25, according to the FDIC. As of Oct. 31, Security Pacific had total assets of about $510 million and total deposits of about $440 million, according to the DFI, which supervises more than 700 financial institutions in California.
“The DFI has been closely monitoring the bank and had ordered it to increase its capital reserves to a safe and sound level. But efforts by the bank to do so were unsuccessful,'' according to a DFI statement released last week. Pacific Western agreed to assume all of Security Pacific's deposits for a 2 percent premium, and will also purchase about $51.8 million of assets, according to the FDIC, which will retain the remaining assets for later disposition. The FDIC estimates the cost to the Deposit Insurance Fund will be $210 million and says Pacific Western's acquisition of the failed bank's deposits was the “least costly'' resolution, compared to alternatives.
Customers with questions about Security Pacific's failure can call the FDIC toll-free at 1-866-934-8944. That number will be operational from 8 a.m. to 8 p.m. Information is also available on the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/securitypacific.html.