Another Los Angeles-area bank fell victim to the real estate market downturn late Friday, as bank regulators seized Security Pacific Bank and sold more than $450 million of its deposits and some assets to Pacific Western Bank.
Security Pacific had total assets of $561 million and total deposits of $450 million as of Oct. 17, according to the Commissioner of the California Department of Financial Institutions, which seized the bank and turned it over to the Federal Deposit Insurance Corp. for disposition.
The bank had a significant proportion of its loan portfolio in so-called acquisition, development and construction loans made in the Greater Los Angeles area and Inland Empire, said FDIC spokesman David Barr. The loans became delinquent as the Southern California real estate market turned sour.
Pacific Western agreed to assume all the deposits for a 2 percent premium, and will purchase approximately $51.8 million of the bank’s cash and cash equivalents, Barr said. Security Pacific’s four branches in Los Angeles, Ontario and Seal Beach will reopen on Monday as branches of Pacific Western, according to a press release on the FDIC’s Web site.
The FDIC will retain the remaining assets, primarily the troubled loans that got Security Pacific into trouble, for later disposition. The cost to the insurance fund is expected to total $210 million, Barr said.
Security Pacific Bank opened as 1981 as Golden Pacific Bank, serving the Inland Empire. In 1999, it expanded into downtown Los Angeles and West Los Angeles and changed its name to Network Bank USA. In February 2005, the name was changed to Security Pacific Bank to reflect its growing focus on serving small to mid-size businesses and high net-worth individuals.
Pacific Western, a wholly-owned subsidiary of San Diego-based PacWest Bancorp, has 60 community banking offices in Los Angeles, Orange, Riverside, San Bernardino and San Diego counties.
Security Pacific’s seizure, along with a $5.1 billion Houston bank also closed Friday, brings to 19 the number of U.S. bank failures this year, three of them in California. Among the most prominent of the failures were Pasadena-based IndyMac and Seattle-based Washington Mutual, which had a significant L.A. presence.
Over the weekend, Security Pacific depositors can access their money by writing checks or using ATM or debit cards, the FDIC said. For information, they can call 1-866-934-8944 or visit: