Saturday, October 17, 2009

The end of an era...

...of easy money for over-building strip malls in Bakersfield.

In the 99th Bank seizure of the year, the FDIC took over San Joaquin Bank.

I still remember the commercials these guys were airing 5-6 years ago featuring non-actors who had joined the bank for access to easy money. "They gave me a loan when no other bank would!", said one smiling yokel in a commercial spot.

Well, since I am pretty certain that San Joaquin is the first bank in Kern county to be closed by the FDIC, we can safely assume those "other banks" are still in business. Who looks smart now?

The full story, courtesy of the Bakersfield Californian.

Regulators close bank
SAN JOAQUIN: Bank employees, regulators worked late into the night
BY JOHN COX AND COURTENAY EDELHART, Californian staff writers, | Friday, Oct 16 2009 10:59 PM

Last Updated Friday, Oct 16 2009 11:18 PM

State regulators shut down San Joaquin Bank Friday, ending a year-long effort to recapitalize the Bakersfield institution. The closure came despite what the bank's chairman said was a successful last-ditch effort to raise enough money from local investors to satisfy liquidity and capital concerns.

Regulators' decision to arrange the sale of the 29-year-old bank's deposits to Ontario-based Citizens Business Bank is expected to have little effect on account holders and borrowers. All five branches of the bank are expected to reopen Monday under the Citizens name.

Brought down primarily by sour real estate development loans, San Joaquin was the largest of three Bakersfield-based banks, and one that was heavily involved in charities and the local business community.

Friday's action by the state Department of Financial Institutions was preceded by negotiations with bank officials culminating in a deadline announced Oct. 1. It gave San Joaquin until Thursday to raise $27 million in new capital. The deadline passed quietly, with little more than a statement by Chairman Rogers Brandon that the bank's efforts to raise money continued.

Those efforts came to fruition Friday, Brandon said, as about a dozen local investors -- "farmers, doctors, lawyers, accountants and media people" -- together pledged $27.4 million in exchange for company stock.

But it was too late: At 3 p.m. Friday, he said, the department informed leaders of San Joaquin's holding company that it was closing the bank.

The order caused some confusion among bank officials, Brandon said, because on Thursday the department's commissioner offered the bank an undisclosed amount of additional time if it could come up with the $27 million by the close of business Friday -- which he said it essentially succeeded in doing.

"We had a very good day at the bank that ended in a very bad result," he said.

Bart Hill, who served as the bank's president and CEO, had no comment Friday.

The closure brings to 99 the number of banks shut down across the country this year. The Federal Deposit Insurance Corp., which has had San Joaquin on its "watch list" since December, said the closure would cost the industry-supported fund $103 million.

According to the state Department of Financial Institutions, the bank's assets totaled $766 million and its deposits came to $626 million on Sept. 30.

Citizens paid the FDIC face value for San Joaquin's deposits. Also, Citizens agreed to purchase essentially all the assets, according to the FDIC. This does not directly impact shares in San Joaquin's holding company.

San Joaquin's highly public downfall, punctuated by news accounts of negotiations with regulators and reassurances by bank executives, was made all the more dramatic Friday as FDIC staffers descended on the bank's 17th Street headquarters shortly before the 6 p.m. close of business.

Men and women in dark suits, some in sunglasses and carrying laptops and briefcases, went inside and posted gatekeepers at the front door.

A couple of them could be seen addressing employees who watched attentively with grim faces. One woman wept quietly as she listened. Most stood still as statues with their arms folded. Occasionally, someone glanced over his or her shoulder at curious onlookers peering through streetfront windows.

Security was discreetly sprinkled in and around the bank, a routine precaution, said Terre Price, regional ombudsman for the FDIC.

Citizens Bank officials began arriving at the bank about 7 p.m., walking quickly and purposefully. They, too, addressed San Joaquin employees, some of whom hugged afterward.

Then bank workers and regulators scattered to desks and cubicles, where they continued working late into the night. No one was allowed in or out.

Outside, Price spoke with reporters about what was taking place.

"It's just like any other acquisition," he said. "The new owners want to see the books and the inventories and the cash deposits, except we do it at an accelerated pace because we want it to be completely seamless for customers.

"When they come in on Monday when the bank reopens, or if they want to make an ATM withdrawal over the weekend, they will be able to do that without any interruption in service."

Price said regulators knew fundraising activity was under way.

"It's always preferable to the FDIC for those efforts to be successful, so we don't want to do anything that would discourage that," he said, adding that that's why the state didn't pull the bank's charter until after the close of business, Price said.

In a written statement issued Friday evening, Brandon thanked bank officers, directors, employees and the general community.

"... On behalf of the board of San Joaquin Bank, I want to personally thank everyone in the community for their support, especially those who came together in an effort to help the Bank continue serving its customers."

Californian Publisher Ginger Moorhouse is a member of the bank holding company's board of directors and Hill is a member of the newspaper's board.