Regulators seize Los Padres Bank

August 21, 2010


Regulators on Friday shut down Solvang-based Los Padres Bank as part of what is being dubbed “bank closure Friday.”

The 14 branches of Los Padres Bank, which includes four in San Luis Obispo County, will reopen on Monday as branches of Pacific Western Bank. The San Diego based bank agreed to assume Los Padres Bank’s assets of $870 million.

Under the terms of the agreement with Pacific Western Bank, the Federal Deposit Insurance Corporation (FDIC) will absorb 80 percent of losses and share in 80 percent of loss recoveries. The FDIC estimates the failure of Los Padres Bank will cost their insurance fund $8.7 million.

The FDIC said they will continue to insure deposits, “so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage.”

“This evening and over the weekend, depositors of Los Padres Bank can access their money by writing checks or using ATM or debit cards,” the FDIC said in Friday’s press release. “Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.”

The FDIC also shut down seven other banks late Friday, bringing the total number of U.S. bank failures this year to 118. The FDIC estimates the eight banks seized Friday will cost the deposit insurance fund $479.4 million.

The eight failed banks had a total of 74 branches.

The other banks closed Friday:

•    Butte Community Bank in Chico, Calif.

•    Pacific State Bank in Stockton, Calif.

•    Sonoma Valley Bank in Sonoma, Calif.

•    ShoreBank in Chicago, Ill.

•    Community National Bank in Bartow, Fla.

•    Independent National Bank in Ocala, Fla.

•    Imperial Savings and Loan Association in Martinsville, Va.

Inline Feedbacks
View all comments

There will likely be two more, and perhaps three, local banks going under. All from their own reckless and irresponsible business practices and not from regulatory mistreatment.

I wonder how many branches these banks involve. Apparently the ShoreBank in Chicago, Ill. is one of the larger banking institutions in that state. I hear that FDIC is close to broke, what happens when the rest of the dive banks close? This is scary.

Shorebank is politically well connected…. Goldman Sachs, Citigroup and General Electric let the original incarnation die so that the FDIC would have to cover the losses, then came in and created Urban Partnership Bank to pick up the pieces for pennies on the dollar, and then ushered the Shorebank execs back in.

What does this mean to Butch Phillips, Prez and CEO of Los Padres?

The public is absorbing $9 million of his company’s bad loans. Does he make money or lose money in this scenario?

First Butch is not CEO he is president. This has been brought about by the NEW regulations that congress passed HELPING big banks and putting an unfair burden on small banks. I guess the little guys didn’t give enought ot the #@^($(%$# in congress and the white house.

This bank has been the friendliest place I have ever done business and will be missed


That was a snarky/inappropriate concern on my part.

I just hate the idea that the bankers might profit from us bailing them out. You didn’t say it in so many words, but my interpretation of your post is that your understanding is that he and the bank are getting screwed just as the taxpayers are.

————————–What went wrong? Will this be happening with other local Banks?

Currently I am having problems with Heritage Oaks Bank not properly applying payments and principal to my property loan with Heritage Oaks Banks since 2002!

This can be seen at

I wonder what happened to Los Padres Bank?