Mission Viejo Bank Seized by Regulators

Federal regulators seized control of Mission Viejo National Bank on Friday, claiming the two-branch institution was insolvent because of “liberal lending practices and ineffective supervision by both the board of directors and management.”

Regulators said the 10-year-old bank was officially designated as insolvent at 4:30 p.m. Friday by the Office of the Comptroller of the Currency, a federal agency that oversees banks with national charters. The Federal Deposit Insurance Corp. was appointed receiver half an hour later.

The recession evidently worsened the bank’s already poor condition. Its two branches are both in Mission Viejo.

Mission Viejo National, which had total assets of about $111 million as of Jan. 31, primarily made commercial and residential mortgage loans. It had 75 employees, all of whom will be laid off within the next three weeks, according to FDIC employee Bob Fitzgerald.

Just last month, recently appointed bank president Jo Ann Kruse said she would be surprised if regulators were not pleased with recent efforts to get Mission Viejo National in shape. She had been looking for an investor to pump cash into the bank to meet regulatory requirements in exchange for an ownership interest.

“Things really aren’t looking all that grim,” she said in January.

Kruse could not be reached for comment Friday.

Mission Viejo National was at death’s door in the mid-1980s. After a few modestly profitable years, it plunged into the red for two straight years, losing nearly $2.8 million in 1984 and 1985, putting itself within the grasp of federal regulators.

Beginning in 1986, the bank’s management pared costs, reduced staff, increased production and turned in a $1.3-million profit the following year, mainly on the strength of the bank’s mortgage banking operations.

The bank sent commissioned loan agents throughout the Southland seeking customers. On Sundays during the summer of 1987, it even set up outdoor lemonade stands near new home developments to attract potential borrowers.