Koreatown’s Center Bank takes over Oakland rival in failure of 8 U.S. institutions
Koreatown-based Center Bank took over a failed financial institution based in Oakland after it was seized late Friday by regulators.
The Federal Deposit Insurance Corp. said Innovative Bank’s four branches, including one in Los Angeles, would reopen Saturday as offices of Center Bank.
In a deal with the FDIC, the L.A. bank agreed to assume Innovative’s $225 million in deposits and buy nearly all its $269 million in loans and other assets. The FDIC agreed to absorb most of the losses on Innovative’s loans.
Innovative Bank had many Korean American customers, as does Center.
“We are pleased to have been able to swiftly capitalize on this opportunity,” Jae Whan (J.W.) Yoo, chief executive of Center Bank’s parent company, Center Financial Corp., said in a statement.
The agency estimated that Innovative Bank’s failure would cost the industry-financed deposit insurance fund about $38 million.
Innovative Bank, which regulators had ordered to raise more capital, had found an investor willing to provide it with nearly $20 million, the Korea Daily reported. But the deal would have required approval from the Federal Reserve, and the FDIC and the California Department of Financial Services were unwilling to accept such a delay, the Koreatown newspaper said.
An FDIC spokeswoman declined to comment.
In other bank failures Friday, Union Bank of San Francisco agreed to take over the seven branches of San Rafael-based Tamalpais Bank, all of them in Marin County.
Outside of California, three Florida banks failed Friday, along with one each in Washington state, Michigan and Massachusetts.
Friday’s seizures brought the number of bank failures in the country this year to 50, including four in California.