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Bank Failure - Security Pacific Bank in California


There was another bank failure today. Security Pacific Bank was closed today by California regulators, and the FDIC was named receiver. Here's the FDIC's press release link, and here's a summary of the closure:
  • Closed Bank: Security Pacific Bank
  • Location: Los Angeles, CA
  • Size: 4 branches, $561.1 assets, $450.1 million deposits
  • Possible Uninsured Deposits: ALL deposits transferred to acquiring bank
  • Acquiring Bank: Pacific Western Bank
  • Cost to Deposit Insurance Fund: $210 million (estimated)
  • 2008 closures: 19th bank to be closed this year
  • Financial Ratings: 0 star at BauerFinancial, 1 star at Bankrate.com
This was another Friday with two bank failures. I just posted on the closure of Franklin Bank by Texas regulators. The last Friday when we had two bank failures was on October 10th.

Like the other closure today, no depositors will lose money, even those with over the FDIC limits. As stated in the FDIC Q&A Guide, it's an All-Deposit Transfer in which all deposits have been assumed by Pacific Western Bank.

Similar to past closures, Security Pacific customers may withdraw funds from a CD without an early withdrawal penalty (see Q&A). One thing different than the previous closure is that Security Pacific CD customers may not be able to keep the original rates through maturity. According to this Q&A,
All interest on insured deposits accrued through Friday, November 7, 2008, will be paid at your same rate. Pacific Western Bank will be reviewing rates and will provide further information soon.

Another difference between the last failure is that this one is much smaller. The estimated cost to the FDIC Deposit Insurance Fund is estimated to be $210 million which is about 14% of the cost of Franklin Bank's failure.

I only did one post on Security Pacific Bank last August when it was offering a special CD and savings account. At the time it had a 0-star rating at BauerFinancial and a 1-star rating at Bankrate.com. These were based on 3/31/08 data. Another indication of problems was a Cease and Desist order (pdf) that the FDIC had issued in April.

Here's the FDIC list of all the recent bank failures. For more info on FDIC coverage, please refer to my Facts about FDIC and NCUA post and my recent post on FDIC News, Resources and History. For the recent changes to FDIC coverage, please refer to this post

Thanks to the readers who sent me news of these closures.

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Anonymous   |     |   Comment #1
Since I've heard of Security Pacific but not Pacific Western Bank I did a little research. Pacific Western Bank seems to do mostly commercial and real estate lending. They're rated 2 stars by BankRate and 3 stars by Bauer. But someone besides the FDIC must like them because their holding company trades on Nasdaq at $27+/share.
Anonymous   |     |   Comment #2
This isn't the very big Security Pacific Bank that got acquired by BofA in 1992.

This outfit somehow scarfed up the name, perhaps a clue to their approach to banking.
tr   |     |   Comment #3
This Bank used to be all over CA. Looks like the bank closures were only being held back by the elections...oh well..time to go back to the real world.
Anonymous   |     |   Comment #4
Per the Security Pacific Bank website:
Security Pacific Bank opened its doors in December 1981 as Golden Pacific Bank, a local community bank serving the Inland Empire. In August 1999 the bank expanded into downtown Los Angeles and West Los Angeles and the name was changed to Network Bank USA. In February 2005 we changed our name to Security Pacific Bank in order to more accurately reflect the nature of our products and services.

Just wanted to give a historical perspective on the generation/use of the name.

OC Steve