San Diego Group Invests $1 Million in People’s Bank

A group led by San Diego businessman Roque de la Fuente II has invested $1.03 million in Chula Vista-based People’s Bank, lifting the troubled bank’s net worth-to-assets ratio to 8.5%, well above the regulatory minimum of 7.5%, the bank said Tuesday.

De la Fuente’s group now controls 47% of the bank’s outstanding stock, according to President Patricia Ann Hutchins.

The De la Fuente group includes Cheker Karam, Isaias Zapata and Chula Vista City Councilman David Malcolm. Malcolm was previously elected to People’s board of directors.

De la Fuente, Zapata and Karam will join the bank’s board, according to terms of the investment agreement, which required De la Fuente and Zapata to resign as directors of Pacific Commerce Bank of Chula Vista.

The Federal Deposit Insurance Corp. issued an order in 1986 calling on People’s to increase its net worth as a percentage of assets, which as of March 31 was 4.4%.

People’s Bank also signed an operating agreement with the California Banking Department requiring it to increase its capital ratio. The state had ordered People’s Bank to “eliminate its retained earnings deficit “ or face a special shareholder assessment.

People’s Bank “anticipates that (the capital infusion) will be sufficient to enable it to cancel the pending assessment of its shareholders and to complete a quasi-reorganization to eliminate its retained earnings deficit,” Hutchins said.

People’s Bank, which was founded in 1980, has $25.5 million in assets. The bank reported a $17,000 net loss for the first quarter ended March 31 and a $214,000 net loss for 1986.