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Tuesday, Dec 6, 2022

Bank Moving on to Merger After Lifting of Order

Torrey Pines Bank, based in Carmel Valley and with more than $1 billion in total assets, got some good news last month when a consent order from the Federal Deposit Insurance Corp. was terminated.

The order that was issued in November 2009 required the bank to take a number of corrective steps but was focused on alleged discriminatory practices by its credit card unit called Partners First.

The bank, which strongly denied the allegations when they became public last year, said earlier this year it had arranged the sale of the credit card unit to a private equity firm, but has yet to consummate the transaction.

The bank hasn’t said anything about the removal of the FDIC order except for an Oct. 22 securities filing statement filed by its parent company, Western Alliance Bancorporation in Las Vegas. The filing simply said the FDIC order was terminated on Oct. 20.

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Calls to CEO Gary Cady were not returned by him. A spokeswoman said he was unavailable for comment.

Consent orders, also called cease and desist orders, generally restrict banks from taking actions such as opening new branches or bidding to acquire failed banks. Torrey Pines did open its eighth office in downtown Los Angeles in August.

Western Alliance Bancorporation, with more than $6 billion in assets and third quarter net earnings of $2 million, said it will be merging Torrey Pines Bank with its other California bank, Alta Alliance Bank, based in Oakland and with about $200 million in assets. WAB gave no timetable when this planned merger would be completed.

It said it was merging these banks as well as its Nevada and Arizona banks to reduce the number of charters from five to three as way to mitigate risk and improve operating efficiency.

According to its report filed with the FDIC, for the third quarter, Torrey Pines Bank had net income of $2.86 million, compared to a net loss of $483,000 for the third quarter of last year.

At $1.19 billion in total assets as of Sept. 30, Torrey Pines reported total loans of $884 million, compared to $704.5 million in loans at the like quarter of 2009.

It also reported nonperforming assets of $10 million, including $8.1 million in nonaccrual loans on Sept. 30. That means its ratio of problem assets to total assets was 0.84 percent, compared to 2 percent in problem assets at the like quarter of 2009. That ratio is well below the average for most commercial banks.

Capital ratios at Torrey Pines are above average for most banks with total risk-based capital at 14.15 percent on Sept. 30, down from 14.4 percent for the like quarter of 2009. Its parent company, Western Alliance, obtained $140 million in federal bailout funding through the Troubled Asset Relief Program, and raised some $280 million in a stock offering in 2009.

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More losses at Sunrise Bank : Sunrise Bank, which merged four affiliate banks belonging to Michigan-based Capitol Bancorp earlier this year, reported net losses through the end of September of $3.8 million. That compared to a net loss for the first half of 2010 of $2.66 million, according to the bank’s most recent call report filed with the FDIC.

Before the second quarter, the four affiliate banks reported their financial results separately.

In other key metrics, the bank’s total assets as of Sept.30 were $262.3 million, up from $257 million in the second quarter of this year, while total loans stood at $194 million, compared to $196 million in the second quarter.

Nonperforming assets as of Sept. 30 were $14.4 million, or 5.5 percent of its total assets. That compared to $11.7 million in nonperforming assets or 4.5 percent of the total as of June 30.

The bank now based in Point Loma still exhibits fairly good capital ratios, with total risk-based capital at 11.53 percent. Ordinarily, that would qualify Sunrise as a well-capitalized bank. But because Sunrise is operating under a consent order since April, it is not complying with a higher threshold of safety.

The order required the bank to take a number of corrective actions, including increasing its Tier 1 capital ratio to at least 9 percent and its total risk-based capital to 12 percent. A call to Sunrise CEO Scott Andrews for comment was not returned.

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New prez named at SD Metropolitan: Stan Abrams, who was the interim president at San Diego Metropolitan Credit Union since March, can breathe a little easier these days after being named as the institution’s permanent president, effective Nov. 1.

Abrams has 34 years in the credit union industry, mainly in executive positions, including a 15-year stint as the president and CEO of Partners Federal Credit Union, which serves employees of the Walt Disney Co. Since 2004, Abrams has been the principal of his own consulting firm, Abrams and Associates Consulting Inc.

Through the first nine months of this year, San Diego Metropolitan reported a net loss of $1.5 million, compared to a net loss of $4.9 million for the like period of 2009.

SD Metropolitan has been in losing mode for nearly four years, and reported net losses for the years 2007 to 2009 of $1.4 million; $2.2 million; and $7.7 million respectively.

As of Sept. 30, the credit union reported holding $6.3 million in delinquent loans, compared to $8.68 million in delinquent loans at September 30, 2009.

It also had net charge-offs, or loans that it considers as a full loss, of $4 million, about the same amount as it charged off as September 2009.

The net worth of SD Metropolitan as of the third quarter was 6.09 percent, meaning it is adequately capitalized.


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