The capital-strapped Harrington West Financial Group Inc. in Solvang, Calif., has decided to leave Kansas.
The $1.16 billion-asset company said late Thursday that it agreed to sell its Kansas City operations to Arvest Bank in Fayetteville, Ark. The deal includes Harrington's three offices and its $93 million of deposits in that market, along with about $94 million of loans.
Harrington said it would be paid a $4.1 million deposit premium, which it needs to help offset losses and boost capital. The premium would be adjusted if the deposits or loans fall below $75 million before the deal's closing.
In April the Office of Thrift Supervision imposed elevated capital requirements on Harrington's Los Padres Bank. The thrift has posted five consecutive quarterly losses totaling $11.7 million, according to data from the Federal Deposit Insurance Corp. Its total risk-based capital ratio shrank to 9.36% at the end of the first quarter, which is below the 10% needed to be well capitalized.
Harrington said it expects to report another loss for the second quarter. It did not say whether the branch sale would be enough to satisfy the regulatory order, which had required the bank to boost its total risk-based capital ratio to 11% by June 30. It also must boost that ratio to 12% by Sept. 30.
The $10.76 billion-asset Arvest has 238 branches in four states, including one in Kansas.
The deal is expected to close in the fourth quarter.