Eight more banks fail; Koreatown's Center Bank takes over Oakland rival
Bank regulators shut down two Northern California banks Friday and six in other states, bringing total bank failures for the year to 50 in the United States and four in California.
The Federal Deposit Insurance Corp. said Innovative Bank of Oakland’s four branches, including one in Los Angeles, would reopen as offices of L.A.-based Center Bank. Innovative and Center each have many ethnic Korean customers.
Union Bank of San Francisco agreed to take over the seven branches of San Rafael-based Tamalpais Bank, all of them in Marin County.
Center Bank, which is based in Koreatown, agreed to assume Innovative’s $225 million in deposits and nearly all its $269 million in assets, with the FDIC shouldering most of the losses on Innovative’s loans. The FDIC said the loss to its deposit-insurance fund was expected to total about $38 million.
Innovative, under regulatory orders to raise more capital, had found an investor willing to provide it with nearly $20 million, the Korea Daily reported. Seung Eun Yeom, who writes about banks for the Koreatown newspaper, said the deal would have required approval from the Federal Reserve, and the FDIC and the California Department of Financial Services were unwilling to accept the delay for that.
An FDIC spokeswoman declined to comment.
"Following our successful capital raises late in 2009, we are pleased to have been able to swiftly capitalize on this opportunity," said Jae Whan Yoo, president and chief executive of Center Bank parent Center Financial Corp. "We believe today's announcement is particularly important in that it marks our entry into Northern California."
Union Bank, a subsidiary of UnionBanCal Corp., agreed to take over Tamalpais’ $488 million in deposits and $629 million in assets, with a similar loss-sharing agreement expected to cost the FDIC about $81 million. Tamalpais branches were to reopen as usual Monday under the Union Bank flag.
The FDIC reported that three Florida banks also failed on Friday, along with one each in Washington state, Michigan and Massachusetts.
-- E. Scott Reckard