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Two California banks fail, will reopen under new owners

February 18, 2011 |  7:41 pm

Two troubled California banks were closed by regulators late Friday and sold to other banks.

San Luis Trust Bank, a one-office bank in San Luis Obispo with $333 million in assets, will reopen next week as a branch of First California Bank of Westlake Village, the Federal Deposit Insurance Corp. said in a statement. First California has $1.7 billion in assets.

Charter Oak Bank of Napa, a two-branch bank with $121 million in assets, was merged into Novato-based Bank of Marin, which has $1 billion in assets, the FDIC said.

San Luis Trust was heavily invested in real estate, an FDIC official who was at the bank Friday told the Pacific Coast Business Times.

Charter Oak had been trying to sell itself to a Walnut Creek bank but regulators scuttled the deal because of the severity of Charter’s loan losses, the Santa Rosa Press Democrat reported.

The FDIC and First California Bank will share in losses on $242 million of San Luis Trust’s assets. Typically, the agency absorbs the bulk of the losses under such agreements. The FDIC estimated that the failure will cost the insurance fund $96 million.

Charter Oak’s collapse will cost the fund $21.8 million, the FDIC estimated.

San Luis Trust and Charter Oak are the 21st and 22nd U.S. bank failures so far this year, and the second and third failures in California. The first was Canyon National Bank of Palm Springs, closed on Feb. 11 and sold to Pacific Premier Bank of Costa Mesa.

-- Tom Petruno