Valencia Bank’s Pension Clients to Be Paid in Full

Beneficiaries of 62 pension plans administered by the trust department at the failed Valencia Bank in Santa Ana will get all of their money back, plus 11% interest, under a settlement approved Thursday by an Orange County Superior Court judge.

The settlement had been worked out between a lawyer for the pension plans and the Federal Deposit Insurance Corp., which is acting as a receiver for the bank and is liquidating its assets. State and federal regulators declared the long-ailing bank insolvent and closed it Feb. 7.

The settlement, which gives the former trust department customers $8.5 million for their original deposits of $6.5 million, represents the final chapter in the alleged mismanagement of the bank’s trust department.

“I’m extremely pleased with today’s action,” said Bruce W. Sumner, a former Superior Court judge who acted as a special trustee for the pension plans. “There could have been a terrible lawsuit . . . , and the whole thing could have been swallowed up in attorney fees.”

The FDIC approved the settlement mainly because the agency hopes that it will mean that more money could be available from liquidation proceedings to pay off general, unsecured creditors, FDIC staff attorney Mary Audick said.