Regulators seized two community banks this weekend after their managements failed to resuscitate them.
Late on Friday, Connecticut Banking Commissioner John P. Burke closed New Haven-based Founders Bank, while California Superintendent of Banks Conrad W. Hewitt shuttered Pacific Heritage Bank, Los Angeles. The Federal Deposit Insurance Corp. was named receiver for both institutions.
Founders had $78.7 million in assets, while Pacific had $155.6 million.
The seizures mark the fifth and sixth closures this year, but Founders is the first institution outside the West Coast to be seized, according to the FDIC.
Waterbury, Conn.-based Center Financial Corp. bid $3.8 million for Founders and will assume $72.7 million in about 5,000 deposit accounts. The holding company will also purchase about $25.3 million in assets.
California Federal Bank, also based in Los Angeles, will assume about $138.4 million in 10,300 deposit accounts, after paying a deposit premium of $752,000.
The thrift will also buy $31.5 million of Pacific's assets.
About $3 million of Founders' deposits and $8.2 million of Pacific's deposits won't be assumed by the other banks because they exceed the FDIC insurance limit of $100,000.
The agency will make advance payments to those depositors of 70% for Founders and 48% for Pacific.
Founders, a state-chartered bank started in 1985, had developed a niche serving small businesses in New Haven and Meriden. The bank was one of only two state banks to be designated a Small Business Administration preferred lender.
The bank had been struggling with high nonperforming assets for several years and was operating under a 1992 cease-and-desist order. Despite officials' efforts, the bank suffered a $2.7 million loss in the first quarter of this year, bringing its equity capital to negative $395,000.
This is the second acquisition in the past month of a struggling institution by Center Financial, which now has $2.2 billion in assets. Center announced on July 11 that it would buy $336 million-asset Great Country Bank, Ansonia, Conn.