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La Jolla Bank branches reopen as OneWest Bank branches
The 10 branches of La Jolla Bank, including one in Beverly Hills and two in Orange County, will reopen today as branches of Pasadena-based OneWest Bank, three days after being closed by government regulators.
La Jolla Bank customers have automatically become depositors of OneWest Bank and will continue to be insured by the Federal Deposit Insurance Corp.
Branches will continue to operate under La Jolla Bank's name until the integration with OneWest Bank is complete. Customers should continue to use their existing branch until OneWest Bank can fully integrate the deposit records of La Jolla Bank, said OneWest Bank President and Chief Executive Officer Terry Laughlin.
Customers with questions about the closure can call the FDIC at (800) 894-2927 from 8 a.m. to 8 p.m. weekdays, 9 a.m. to 6 p.m. Saturdays and noon to 6 p.m. Sundays. Information is also available online at www.fdic.gov/bank/individual/failed/lajolla.html.
The Office of Thrift Supervision ordered La Jolla Bank's closure Friday because its "financial management had rapidly deteriorated" and "fraudulent activity was recently discovered," said Greg Hernandez of the Federal Deposit Insurance Corp.
La Jolla Bank's "poor financial condition was due to significant losses in its acquisition, development and construction loan portfolios" and "significant losses in its commercial loan portfolios," Hernandez told City News Service.
"Poor credit administration practices" and the weak real estate market also contributed to the bank's failure, Hernandez said.
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La Jolla Bank was added to the Office of Thrift Supervision's Problem Institutions List in June 2009, Hernandez said. La Jolla Bank had total assets of $3.6 billion and total deposits of $2.8 billion as of Dec. 31.
OneWest Bank did not pay a premium to assume all the deposits of La Jolla Bank. It also agreed to purchase essentially all of its assets.
The FDIC and OneWest Bank entered in a loss-share transaction on $3.31 billion of La Jolla Bank's assets. OneWest Bank will share in the losses on the asset pools covered under the loss-share agreement.
Hernandez estimated that La Jolla Bank's failure will cost the FDIC's Deposit Insurance Fund $882.3 million.
OneWest Bank's acquisition of all of La Jolla Bank's deposits was the "least costly" resolution for the fund compared to the alternatives, Hernandez said.
The acquisition of all of La Jolla Bank's assets "continues our mission of building OneWest Bank as a premier regional bank focused on customer service," said OneWest Bank chairman Steven Mnuchin.
La Jolla Bank is the 20th FDIC-insured institution to fail in the nation this year, and the second in California.
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In addition to Mission Viejo and Newport Beach in Orange County and Beverly Hills, La Jolla Bank also had branches in Indian Wells, La Quinta and Palm Desert in Riverside County; Escondido, La Jolla and Rancho Santa Fe in San Diego County; and Dallas.
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