The bank started out as Security Pacific National Bank in 1981 and in 1992 was acquired by Bank of America. A new Security Pacific Bank emerged in February 2005, the result of a name change by a bank formed from the merger of Network Bank USA and Golden Pacific Bank. The new Security Pacific Bank had no relation to Bank of America or the former Security Pacific National Bank.
The bank had a significant proportion of its loan portfolio in so-called acquisition, development and construction loans made in the Greater Los Angeles area and Inland Empire, said FDIC spokesman David Barr. The loans became delinquent as the Southern California real estate market turned sour. The California Department of Financial Institutions (DFI) had been monitoring the bank and had ordered it to increase its capital reserves to a safe and sound level. Efforts by the bank to do so were unsuccessful.
Security Pacific Bank, Los Angeles, CA was closed today by the Commissioner of the California Department of Financial Institutions, and the FDIC was named receiver. The FDIC entered into a purchase and assumption agreement with Pacific Western Bank, Los Angeles, CA to assume all of the deposits of Security Pacific.
As of October 17, 2008, Security Pacific had total assets of $561.1 million and total deposits of $450.1 million. As of October 31, 2008 the bank had total assets of $510 million and total deposits of approximately $440 million.
Pacific Western agreed to assume all the deposits for a two percent premium. In addition to assuming all of the failed bank's deposits, Pacific Western will purchase approximately $51.8 million of assets. The FDIC will retain the remaining assets for later disposition.
The cost to the insurance fund is expected to total $210 million.