First International Bank Stymied In Name Change
Banking: Quorum for Vote Difficult Due to FDIC Restrictions
BY MIKE ALLEN
Senior Staff Writer
CHULA VISTA , First International Bank, the Chula Vista bank owned mainly by developer and car dealer Roque De La Fuente, has hit a roadblock in its quest to change its name and image , it cannot obtain a quorum for an official shareholders meeting.
Last month, the 23-year-old bank tried to hold its first annual meeting in three years, but was thwarted when not enough shareholders showed up.
A big obstacle is De La Fuente, who was removed from the bank’s board in 2000 by federal fiat, and is prohibited from voting his shares or having any say in the bank’s operations.
The developer personally owns more than 25 percent of the bank’s stock, but family members, relatives and entities affiliated with De La Fuente collectively own about 60 percent, said FIB President Tom King.
King said the bank is attempting to change its name and image to attract new capital investors and grow the bank, which has been mired at about $50 million for several years.
“We’re trying to reposition the bank and turn it into something different, a community bank with a different name,” said King, who has headed the bank for about a year.
King said most potential investors are scared away when they find out who owns the bank. De La Fuente has a history of high profile litigation, including major civil suits against the county and city of San Diego.
In December 2000, a San Diego jury awarded De La Fuente $94.5 million in a case the city has appealed.
In 1997, the county settled a 10-year legal battle over land it acquired from De La Fuente through eminent domain for a total of $38.7 million.
Won’t Sell Shares
King said De La Fuente has made it clear he won’t sell his shares and is fighting the Federal Deposit Insurance Corp., for its actions against him, dating back to the early 1990s.
“He eventually expects to beat the government, but he has less than a zero chance of doing that,” King said.
De La Fuente points to his string of legal victories over other government agencies.
“What the FDIC did is unconstitutional. They basically told our bank’s shareholders you cannot run your own company,” he said.
“Just like I was able to beat the county, and just like I was able to beat the city, I’ll be able to beat the FDIC,” De La Fuente said.
He also said he’s willing to sell his bank shares, if the price is right.
De La Fuente’s battle with the FDIC began in 1992 when the agency charged First International Bank with a host of unsafe and unsound banking practices, and self-dealing by its owner.
That year, the agency issued a cease and desist order against the bank, including the removal of De La Fuente as chairman of the board. The order was lifted in 2000.
FDIC Actions
The FDIC also filed suit against De La Fuente, and in 2000, had him removed from the bank all together, barred him from voting his shares on any bank issue, and also barred him from serving on the board of any depository institution.
Last November, the FDIC issued another cease and desist order that required the bank to take a number of actions, including increasing its capital and reserves, improving internal control policies, and increasing its board by three members, none of whom are affiliated with De La Fuente.
FDIC spokesman Frank Gresock declined to comment on the most recent FDIC order, or discuss the ongoing litigation against De La Fuente.
King said he’s hoping to hold another shareholders meeting later this year, and get a new business plan and name change approved. He said he has a plan to circumvent the sticky issue of its majority owner who continues to wage war against the government.
King says the bank’s name needs to change to reflect the ownership change and its lending focus. “We aren’t doing any international business, or making loans in Mexico,” he said. “The name is irrelevant.”
King said the bank has been complying with the regulatory order and its balance sheet is in the best shape in many years.
For the six months ended June 30, First International had net income of $194,000, and total assets of $49.9 million. For all of 2001, the bank reported a net loss of $117,000.
Problem loans have been reduced and total $918,000, according to a recent FDIC call report. King said most of that is one large loan of about $800,000 involving a borrower that went into bankruptcy, but has been paying down the loan.
