Menu
/REGISTER
PPB
Fielding
Montecito
Powershare
Loading...
You are here:  Home  >  Latest news  >  Current Article

Los Padres Bank parent given order to raise capital by July 31

By   /   Wednesday, July 28th, 2010  /   Comments Off on Los Padres Bank parent given order to raise capital by July 31

    Print       Email

Under a new order from federal regulators, Solvang-based Harrington West Financial Group, parent company of Los Padres Bank, has until the end of the week to boost its capital levels or have the U.S. Office of Thrift Supervision step in.

The OTS put Los Padres under what’s called a “prompt corrective action,” or PCA — a measure that lets federal regulators take a bank into receivership when its capital dwindles — on July 26, giving it only until July 31 to recapitalize.

“The company and the bank cannot provide any assurance that the deadlines and other terms of the PCA directive can be satisfied,” Harrington West said in a news release.

According to the bank release, regulators denied its most recent capital restoration plan.

Los Padres, the fifth largest banking company based in the region with almost $1 billion in assets, has 13 branches throughout the Tri-Counties.

The banking company has struggled for months with capital ratios, but said in late January that it had returned to “adequately capitalized,” escaping a regulatory action that can precede a seizure.

Craig Cerny, Harrington West’s CEO, told the Business Times in October 2009 that the company was on track to raise the money it needs. “We are and have been working hard and think we have a viable plan there to put our capital in position that would materially exceed these ratios,” Cerny said then, saying he planned to look for investors.

In November 2009, Los Padres sold its Kansas City branches to Arvest, an Arkansas-based company, for book value plus a $4.1 million cash premium. That cleared $96.2 million in loans and assets from its books as well as $94.9 million in deposits.

But even as it dodged the earlier prompt corrective action, the company remained under a longer-term cease and desist order to raise capital ratios.

The bank lost $45.4 million in 2009 but earned $74,000 in the first quarter of 2010. Harrington West stock, traded over-the-counter under the symbol HWFG, closed at 22 cents on July 28. It has been under $1 since October.

According to its first-quarter call report on March 31, the bank had $901 million in assets. Its tier one core capital ratio was 5.37 percent and its risk-based capital ratio was 7.35 percent at the end of the first quarter.

The bank has not yet announced its second quarter earnings or capital ratios, but said in the July 28 release that it continues to “vigorously pursue avenues to meet the PCA directive and all other regulatory requirements.”

Bank officials could not immediately be reached for comment.

Are you a subscriber? If not, sign up today for a four-week FREE trial or subscribe and receive the Book of Lists free with your purchase.
    Print       Email

You might also like...

Brownley, Carbajal gain if House flips to Democrats

Read More →