A look at local banks that participated in the federal bail-out
It’s been two years since a number of Orange County-based banks received money from the Treasury Department’s Troubled Asset Relief Program to stabilize the financial industry as it teetered on collapse at the flashpoint of the recent recession.
Treasury invested some $410 billion of the $700 billion program in more than 900 banks, insurers, automakers and others. Since then, more than 300 banks have failed (see related story, page 6), including one local TARP recipient.
The federal program did help some local community banks shore up balance sheets, improve capital positions and increase lending. One decided it did not want or need the help and quickly repaid the money. One is repaying the loan and one has been shut down by regulators. Another has yet to make a payment and has drawn increasing scrutiny from regulators.
—Chris Cassachia
Commerce National Bank
Newport Beach
Assets: $247.9 million
TARP investment: $5 million in January 2009
TARP payments: $5 million in October 2009
Commerce National said the TARP money would help the bank “grow its basic customer base of Orange County business and professional deposit and loan accounts” and strengthen its capital base.
The bank’s board of directors decided to pay back the TARP money after only nine months amid negative public sentiments on the bail-out program. Commerce National said it was in shareholders’ best interest to repay the TARP funds “as the bank did not need them, and was not, and is not, a troubled or problem bank.”
Saigon National Bank
Westminster
Assets: $64.4 million
TARP investment: $1.5 million in December 2008
TARP payments: 0
Saigon National, which caters to businesses in the Vietnamese-American enclave of Little Saigon, said it planned to use the money to make more loans.
Saigon National has since lost more than $11 million and missed eight consecutive TARP payments, the most of any bank in the country.
Roy Painter, executive vice president and chief financial officer of Saigon National, declined comment on operations.
The federal Office of the Comptroller of the Currency last year ordered Saigon National to improve management, boost capital ratios, conduct an internal audit, examine its commercial loan portfolio and hold off on any increase in loans.
Pacific Coast National Bank
San Clemente
Assets: N/A
TARP investment: $4.1 million in January 2009
TARP payments: 0
Pacific Coast National had two branches specializing in Small Business Administration loans and said it planned to use the funds to expand its business.
In November 2009, Pacific Coast was closed by the Office of the Comptroller of the Currency and the Federal De- posit Insurance Corporation was named receiver.
Tustin-based Sunwest Bank assumed Pacific Coast’s deposits and assets.
Under TARP provisions, Sunwest did not assume any debt resulting from Pacific Coast’s TARP funds.
The debt was written off by the Treasury Department.
US Metro Bank
Garden Grove
Assets: $108 million
TARP investment: $2.8 million in February 2009
TARP payments: Approximately $266,000
Five-year-old US Metro Bank, which typically makes loans of between $200,000 and $1 million to small businesses, took TARP money to shore up capital as the credit markets tightened.
US Metro Bank ended up using the money to boost lending, according to Dianne Seo, executive vice president and chief financial officer. “We thought it was good to have more capital because it was a very uncertain time.”
The bank is paying about $38,000 in dividends every quarter to the Treasury Department and expects to repay the remaining balance of the TARP investment in a couple of years.
