Regulators work to reopen banks seized, closed due to financial problems

Jul 19, 2009 (The Press-Enterprise - McClatchy-Tribune Information Services via COMTEX) -- VNBC | Quote | Chart | News | PowerRating -- Officials on Saturday assured Temecula Valley Bank customers that their money is safe as dozens of bank employees and regulators worked inside to complete its sale before reopening on Monday.

Temecula Valley and Vineyard National Bank, which had long been struggling, were seized and closed late Friday by state and federal regulators. The two banks were the 56th and 57th in the nation to be seized this year.

On 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.

Glenn Watler, ombudsman for the Federal Deposit Insurance Corp., answered customers' questions as he stood outside Temecula Valley's headquarters. He said people seemed relieved about the transition and didn't demand to withdraw their money. Depositor money is insured and not in jeopardy.

"Customers don't have to do anything," Watler said. "You won't notice a thing."

Customers still can use their ATM cards and checks, no matter that Temecula Valley's name is on them, Watler said. Payroll and Social Security checks that are directly deposited into customers' accounts will not be affected, he said.

Barbara Thompson, spokeswoman for First Citizens Bank & Trust, said Saturday it was too soon to know whether Temecula Valley Bank employees would keep their jobs through the transition.

"We're just beginning to evaluate the operation," she said "Our goal is to make this a seamless transition and to build a better bank."

Vineyard, a Corona-based bank, and Temecula Valley have been reeling during the past year from heavy losses tied to delinquent construction loans made to home builders and commercial developers. Banking experts expected the seizures of both banks, each with more than $1 billion in assets.

The parent firms of 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.

Employees at the First Citizens branch in Corona walked in and out of the office Saturday morning as a banner was hung to cover the old Temecula Valley bank name. A block away, several employees at the Vineyard Bank headquarters talked among themselves in the parking lot before entering the building. All those approached declined to be interviewed.

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 6 p.m. on Friday.

Temecula Valley Bank typically is closed on Saturdays. So, customers, some of whom hadn't heard about the bank seizure, said they were surprised to see a full parking lot when they arrived to use the ATM.

Ida Hines, 80, of Murrieta Hot Springs, said she had been a Temecula Valley customer more than a dozen years. Like many people, she said she wasn't concerned because she knows her money is insured and safe.

"I thought they were having a board meeting," she said. "I didn't see this coming," she said of the bank's seizure.

Staff writer Gene Ghiotto contributed to this report.

Reach Lora Hines at 951-368-9444 or lhines@PE.com

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