Vineyard and Temecula Valley banks seized

Look up the PowerRating of VNBC and see how it has performed over the past week as well as the current proprietary PowerRating.

Jul 18, 2009 (The Press-Enterprise - McClatchy-Tribune Information Services via COMTEX) -- VNBC | Quote | Chart | News | PowerRating -- TWO LONG-STRUGGLING INLAND BANKS -- Vineyard National Bank and Temecula Valley Bank -- were seized and closed late Friday by state and federal regulators.

A Federal Deposit Insurance Corporation statement said that effective Monday, Vineyard customers will be clients of California Bank & Trust of San Diego, which has assumed deposits at Vineyard's 16 offices.

Temecula Valley's customers will be clients of First Citizens Bank and Trust Company of Raleigh, N.C., which has assumed deposits at that bank's 11 offices.

Authorities said depositor money is insured and not in jeopardy. The FDIC said in statements that depositors can access money by writing checks or using their ATM and debit cards.

The Corona- and Temecula-based banks have both been reeling during the past year from heavy losses tied to delinquent construction loans made to home builders and commercial developers.

At the Temecula Valley headquarters, about 100 people -- bank employees and regulators -- were inside the bank Friday evening. Outside, several were unloading crates of soft drinks and water in preparation for a long weekend.

"No depositor has lost any money," said FDIC ombudsman Glenn Watler. "Let's make that clear."

The FDIC is going to work with employees of the bank over the weekend so they can reopen Monday morning as branches of Citizens Bank and Trust, said Watler, standing outside the Temecula headquarters. He said it should be "a seamless transition."

Janet Scott of Temecula was greeted by the ombudsman as she arrived to use the bank's ATM.

"I'm glad it got purchased by another bank," Scott said. "The FDIC has been very informative. Everything seems to be positive, just under a different name.

"It's sad to see something that you saw born have to go through this transition, but I guess it's just part of the times," she said. Temecula Valley was established in 1996 and has branches in San Diego, Riverside and San Bernardino counties.

A Temecula Valley branch under construction in Murrieta will probably be completed, Watler said, but that decision will be up to the acquiring bank.

At the Vineyard branch office at 200 S. Main St., in Corona, a notice and news release from the federal Office of the Comptroller of the Currency were taped to the glass doors. No one would comment on the closure.

Vineyard's headquarters, at 1260 Corona Pointe Ct., was a hive of activity; regulators and employees could be seen working inside.

An FDIC spokesman who declined to give his name said the federal agency solicited 157 banks to acquire Vineyard and received two bids. Agency workers will have a presence at the office all weekend.

"The good thing about this transaction is it's seamless for almost everybody involved," the spokesman said. "It's certainly seamless for customers."

Michael Natzic, a community banking specialist in the Big Bear Lake office of brokerage firm Stone & Youngberg, said the seizures had become a matter of when -- not if -- since the financial conditions of both banks had been known for several months, with Vineyard in more dire shape for a longer period. But he was surprised that regulators decided to close and transfer both banks, each with more than $1 billion in assets, on the same evening.

Taking Over

"I would have thought they would only do both on the same day if they had one buyer acquiring both in a package deal -- like what happened when US Bank got PFF and Downey Savings last year," Natzic said.

He said California Bank & Trust is a stalwart of the San Diego area banking scene with a good reputation, and the acquisition of Vineyard will give it its first significant Inland presence. California Bank & Trust has experience in absorbing failed institutions, after its recent acquisition of the failed Alliance Bank in Culver City.

Vineyard, founded in 1981, was closed by the federal Office of the Comptroller of the Currency, and Temecula Valley was shuttered by the California Department of Financial Institutions. Both agencies appointed the FDIC as receiver.

The FDIC started closure and transition proceedings at both banks at the close of business Friday at 6 p.m.

First Citizens and California Bank & Trust were selected by the FDIC to complete the acquisitions through a competitive bidding process.

In a statement, First Citizens said its purchase of Temecula Valley will complement its six offices operated by BancShares' IronStone Bank in San Diego and Orange counties.

In its own statement, California Bank & Trust said its transaction includes $1.4 billion in loans and $1.5 billion of deposits of Vineyard, which has offices throughout Riverside, San Bernardino, and Los Angeles counties. The bank will enter into a loss-sharing agreement with the FDIC on loans and real estate.

California Bank & Trust operates 93 branches and seven loan production offices statewide. It is a subsidiary of Utah-based Zions Bancorporation.

The parent firms of both Vineyard and Temecula Valley had received a series of state and federal regulator warnings during the past year, calling on them to boost capital levels and make other operational changes. Both also saw announced investments by outside investor groups fall through, spurring Friday's action by regulators.

Others seized

The two Inland banks were the 56th and 57th in the nation to be seized and closed this year by regulators.

Friday's closures followed the November seizure of Rancho Cucamonga-based PFF Bank & Trust and the January seizure of Redlands-headquartered 1st Centennial Bank. In both cases, no depositor money was lost and services were not interrupted.

Vineyard and Temecula Valley officials could not immediately be reached for comment Friday.

Press-Enterprise reporter Aaron Burgin and free-lance journalist Jerry Soifer contributed to this report.

Reach Lou Hirsh at 951-368-9559 or lhirsh@PE.com.

To see more of The Press-Enterprise or to subscribe to the newspaper, go to
http://www.pe.com. Copyright (c) 2009, The Press-Enterprise, Riverside, Calif.
Distributed by McClatchy-Tribune Information Services. For reprints, email
tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax
to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave.,
Suite 303, Glenview, IL 60025, USA.

More News:   Market Updates | Stock Alerts | All Trading News | Stock Index