New Owner Will Reopen Seized Bank : Finance: Southern California Bank acquires insured deposits of Anaheim’s American Commerce National Bank, which will be open for business today under its new name.
Southern California Bank said Sunday it has acquired the insured deposits of American Commerce National Bank, two days after federal regulators exercised new powers to seize the financial institution.
The Anaheim-based bank will reopen and assume its new name today, and will continue to honor about $110.8 million in deposits, federal regulators said. The automatic teller machine will be back in service Tuesday.
“The bank strategically works for us, we like the location, we’re in the area and we have a strong service,” said David A. McCoy, executive vice president and chief operating officer of Southern California Bank, which is based in Downey and has seven of its 18 branches in Orange County.
Southern California, which caters largely to personal and small business banking needs, will pay the Federal Deposit Insurance Corp. a premium of $101,000 for the right to receive the deposits. About $10 million in 365 accounts that exceed $100,000--and uninsured by the federal government--remain in the hands of the FDIC.
The Downey bank was approached by the FDIC on Friday, shortly after the federal Office of the Comptroller of the Currency seized the Anaheim institution and accused operators of concealing records, lying and wasting the bank’s finances.
Regulators also said that they were unable to determine the bank’s financial condition because executives refused to turn over records about insider deals, borrowers’ credit histories and other information.
The comptroller, which regulates national banks, was for the first time using a new bank reform law that allows it to take over financially healthy banks that it believes could eventually collapse through reckless or poor management. The bank was then placed into receivership with the FDIC.
The comptroller also ousted the Anaheim bank’s eight directors and five top officers, including Chairman Gerald Garner. Regulators are seeking to ban them from the banking industry for their “weak, abusive and self-serving activities.”
Among other things, the comptroller accused Garner, once a lawyer in New York, of using the bank to pay his legal fees to fight disbarment in that state. The comptroller also charges that he removed information from bank files about the bankruptcy of his brother, who continued to receive unsecured loans from the bank.
Garner has declined comment, but he said that he plans to hold a news conference this week.
The comptroller also said that the bank had an “inordinate reliance on volatile, high-cost deposits to fund its operations.” Only 11% of the bank’s deposits were from its local area, with the rest from outside its Anaheim-area market. The bank depended heavily on courier services in its transactions.
Although Southern California hopes to increase the local customer base, “(The courier service) will continue at least in the near term,” McCoy said. “We do some of that now, but not on the scale that they did.”
About 11 Southern California Bank executives worked feverishly through the weekend, erecting new banners and going through staff lists to get the bank up and running by 9:30 this morning. Coincidentally, the Downey bank is scheduled to open a branch inside a Pavilions supermarket in Anaheim Hills today as well.
The Downey bank, which has about $472 million in assets, is expected to retain American Commerce’s “front end” employees such as tellers and clerks. But few “back-room” personnel, those with desk jobs such as bookkeepers, are expected to remain because Southern California already has similar staffing, McCoy said.
Southern California plans to send a letter to all of American Commerce’s deposit customers within a week. The bank will continue to honor checks from the seized bank until new checks are issued in about a month, McCoy said.
