Magazine article American Banker

Time Just Ran out at Bank of San Diego

Magazine article American Banker

Time Just Ran out at Bank of San Diego

Article excerpt

A host of community banks in Southern California are rushing to meet year-end deadlines to raise their capital levels, and analysts and bankers there say some banks win make it, while some won't.

For Bank of San Diego, time has already run out.

On Friday, the Federal Deposit Insurance Corp. was appointed receiver for the bank by California Bank Commissioner James Gilleran.

The $316.8-million-asset institution had been struggling under a $42 million load of non-performing assets. Its deposits and branches were sold to several competitors on Friday.

Frank Mercardante, the chief executive of Bank of San Diego, had been working for 10 months to arrange a purchase of the bank by an outside investor with FDIC assistance.

"The level of nonperforming assets was sufficient enough to scare off most investors," Mr. Mercardante said from his office on Monday morning. "Those that were still interested were only interested in doing a deal on an FDIC-assisted basis. We were just unable to do that."

"I firmly believe we did everything within our ability to bring in an investor," he said. "I was in contact with upwards of 100 potential investors, some of them international. We did all the right things and we still weren't able to put it together."

Bank of San Diego was the second community bank in Southern California to fail in a month, and the 19th this year. Only eight failed in the state last year and three failed in 1991.

First National Bank of San Diego, run by former First City Bank (Houston) president Robert Richley, has since August been trying to arrange a sale of $8 million worth of new stock to an investor group to stave off failure. …

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