SAN FRANCISCO (MarketWatch) — The Federal Deposit Insurance Corp. and state regulators seized Los Angeles-based Security Pacific Bank late Friday — one of two banks to fail that day and the 19th to fail so far this year.
Pacific Western Bank, also based in Los Angeles, will assume all of the deposits of Security Pacific, the FDIC said in a statement. Also on Friday, Houston-based Franklin Bank SSB (FBTX:Franklin Bank Corporation was closed by regulators. See full story.
The four branches of Security Pacific will reopen on Monday as branches of Pacific Western. Depositors of the failed bank will automatically become depositors of Pacific Western.
Deposits will continue to be insured by the FDIC. As of Oct. 17, Security Pacific had total assets of $561.1 million and total deposits of $450.1 million.
Pacific Western agreed to assume all the deposits for a 2% premium, according to the FDIC. In addition to assuming all of the failed bank’s deposits, Pacific Western will purchase approximately $51.8 million of assets. The FDIC will retain the remaining assets for later disposition.
The FDIC estimates that the cost to the Deposit Insurance Fund will be $210 million. Pacific Western’s acquisition of all deposits was the “least costly” resolution for the FDIC’s Deposit Insurance Fund compared to alternatives, according to the statement. Security Pacific is the third bank to fail in California this year.
Last update: 11:04 a.m. EST Nov. 8, 2008
Source: Market Watch