Foothill Ranch-based American Sterling Bank is being sold to insurer Phoenix Cos. after a plan to shore up the bank was rejected by regulators.
Hartford, Conn.-based Phoenix plans to take over American Sterling Bank and get federal funding from the government’s banking bailout program.
The deal is expected to close within a month.
Larry Dodge, a prominent philanthropist and businessman who lives in Dana Point’s Monarch Beach, now owns American Sterling Bank.
He acquired the bank in 1971 and has been working since last year to reverse loan problems and other issues that have drained American Sterling Bank’s cash since last summer.
Late last year, Dodge’s American Sterling Corp. holding company injected $20.5 million into the bank.
But Dodge’s plan to fix American Sterling Bank recently was rejected by the Office of Thrift Supervision, according to a report in the Kansas City Star newspaper.
American Sterling Bank has its operational headquarters near Kansas City.
Phoenix provides life insurance and annuity investments. It had $28 billion in assets at the end of September.
Earlier this month, Phoenix signed a nonbinding letter of intent to buy American Sterling Bank in a deal contingent on getting money from the Treasury Department.
In November, Phoenix said it would seek status as a thrift holding company to qualify for federal money.
The deal requires Phoenix to shore up American Sterling Bank by raising several key ratios that measure a bank’s financial health.
American Sterling Bank’s must bring its total risk-based capital ratio to 8%, up from 5.2% as of Sept. 30, according to regulators.
Its tier one core risk-based capital ratio has to go to 8% from 4.75% as of Sept. 30.
Its leverage ratio has to go to 4%, up from 2.33% on Sept. 30.
