Center Financial Corp. said late Friday that its Center Bank subsidiary has acquired the banking operations of Innovative Bank in Oakland from the Federal Deposit Insurance Corp.
The FDIC and California Department of Financial Institutions closed Innovative Bank at the end of the business day. Three Innovative’s branches will reopen Saturday as part of the Center Bank franchise, including one branch in downtown Los Angeles. The headquarters branch in Oakland will reopen on Monday as part of Center Bank.
Center Bank said it is receiving total assets of about $284 million, including about $178 million in loans, and assumes substantially all of Innovative’s liabilities, including about $240 million in deposits.
The FDIC in its own announcement said that Center Bank paid the FDIC a premium of 0.5 percent to assume all of Innovative’s deposits. As of December 31, Innovative had nearly $269 million in total assets and more than $225 million in total deposits.
The FDIC and Center Bank also entered into a loss-share transaction on $178.1 million of the assets that were loans held by Innovative. Under loss sharing, the FDIC agrees to absorb a portion of the loss on a specified pool of assets in order to maximize asset recoveries, minimize FDIC losses and move assets quickly into the private sector.
Center Financial itself had been considered a troubled bank not long ago. It reached memorandums of understanding with regulatory agencies last year to strengthen its financials by reducing classified assets and increasing capital levels. In December, it arranged two private placements that raised roughly $86.3 million in new capital. The bank holding company ended the fiscal year with a $24.4 million net loss.
“Following our successful capital raises late in 2009, we are pleased to have been able to swiftly capitalize on this opportunity,” said Chief Executive Jae Whan (J.W.) Yoo in a press release. “We believe today’s announcement is particularly important in that it marks our entry into Northern California.”
Center shares on Friday earlier closed up 14 cents, or 2.7 percent, to $5.34 on the Nasdaq.
