Capistrano Bank Financial Aid Bid Fails

Embattled Capistrano National Bank’s latest bid for financial salvation has collapsed, The Times has learned, and the bank has begun anew its search for at least $4 million in new capital to fend off regulatory action.

Capistrano Bancorp had announced last month that it was involved in negotiations to sell 80% of its Santa Ana-based banking subsidiary to an unidentified investor group for $4 million.

But that deal, banking industry sources said Wednesday, has now fallen through, leaving Capistrano National Bank with a significant capital deficiency and an ever-shortening grace period from the Federal Deposit Insurance Corp. to do something to improve its financial condition. The FDIC insures deposits and, to guarantee the safety of its insurance, can require banks to raise new capital, change management or alter business plans.

Officials at the bank, which lost $3.9 million in 1982 and 1983, could not be reached for comment Wednesday.

Even with a $4-million infusion of capital, industry sources have said, Capistrano National’s ratio of capital-to-assets would remain well below the minimum levels required by federal regulators. The FDIC ordered the bank more than a year ago to raise its capital ratio to at least 7.5% of assets, the standard ratio for troubled banks.

After the FDIC’s order, a group of outside investors pumped $5 million into the bank in an attempt to meet the capital requirements. However, the bank’s financial condition has continued to worsen, according to industry sources. Capistrano National, which has four offices, had $75 million in assets last June 30. It has not yet released its 1984 financial statement.