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Feds Close Imperial Capital Bank of La Jolla

The Federal Deposit Insurance Corp. today (Dec. 18) shut down Imperial Capital Bank of La Jolla. The bank was sold to Los Angeles-based City National Corp., which will assume all Imperial deposits. No depositors should lose money, the FDIC said. Imperial has nine branches -- all in California except one in Maryland and one in Nevada. Imperial's big problem was a series of bad loans secured by apartment buildings throughout the nation, according to the Los Angeles Times. The bank lost $112 million through three quarters and failed to meet a December 14 deadline to raise $200 million in capital. It had $4 billion in assets and $2.2 billion in deposits. The FDIC will take over some of its bad assets.

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The Federal Deposit Insurance Corp. today (Dec. 18) shut down Imperial Capital Bank of La Jolla. The bank was sold to Los Angeles-based City National Corp., which will assume all Imperial deposits. No depositors should lose money, the FDIC said. Imperial has nine branches -- all in California except one in Maryland and one in Nevada. Imperial's big problem was a series of bad loans secured by apartment buildings throughout the nation, according to the Los Angeles Times. The bank lost $112 million through three quarters and failed to meet a December 14 deadline to raise $200 million in capital. It had $4 billion in assets and $2.2 billion in deposits. The FDIC will take over some of its bad assets.

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10

It looks like former Imperial Capital CEO George Haligowski was fired by the Board on 10/31/2009. Per the terms of George's employment agreement on file at the SEC website, he is entitled to $7.315 million if he's fired. I wonder, did he get the payout when the Board put the boot to his keester? He also had $2 million in deferred compensation stashed away in a trust, supposedly at the risk of Imperial's creditors. I wonder, was he able to pocket the $2 million before the bank went under?

Dec. 18, 2009

Response to post #1: Those are good questions. I haven't looked into that matter. Best, Don Bauder

Dec. 19, 2009

There is a related FDIC press release "City National Bank, Los Angeles, California, Assumes All of the Deposits of Imperial Capital Bank, La Jolla, California" at http://www.fdic.gov/news/news/press/2009/pr09238.html

From the press release: "The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $619.2 million. City National Bank's acquisition of all the deposits was the 'least costly' resolution for the FDIC's DIF compared to all alternatives. Imperial Capital Bank is the 139th FDIC-insured institution to fail in the nation this year, and the sixteenth in California. The last FDIC-insured institution closed in the state was Pacific Coast National Bank, San Clemente, on November 13, 2009."

No mention of executive compensation was found in the press release. Media contact information can be found on the press release webpage.

Dec. 19, 2009

No mention of executive compensation was found in the press release. Media contact information can be found on the press release webpage

From the 10-K, Imperial Captial Bancorp is the holding company for Imperial Capital Bank. While the FDIC seized Imperial Capital Bank, Imperial Capital Bancorp remains in business, minus it operating asset, the bank. The same thing happened when the Feds seized Homefed Bank. If I recall correctly, the holding company for Homefed remained in business after the seizure as a real estate developer. It's not clear which corporation is liable to pay Haligowski's termination payment.

Dec. 19, 2009

Response to post #3: That's the kind of thing you have to try to get by phone. It probably won't come out in a bank filing; the bank has been seized and may not make any more filings, although sometimes seized institutions file an obituary for shareholders. The FDIC is unlikely to mention it in any of its paperwork. Best, Don Bauder

Dec. 19, 2009

Response to post #4: Yes, the old Homefed stayed on as a real estate operation. Its stock actually got hot again 7 or 8 years ago. I did several stories on that while with the U-T but have forgotten many of the details. Best, Don Bauder

Dec. 19, 2009

Hey-didn't everyone get the word- The great Ben Bernanke said the Great Recession is OVER, be happy, celebrate, no more worries.

Dec. 19, 2009

Response to post #7: Yeah, typical Fed head, talking out of both sides of his mouth. He says the recession is over, growth is coming back, even employment is improving. But then he keeps interest rates at zero. Hmmm. Best, Don Bauder

Dec. 19, 2009

Hey, the Great Recession is over, NO MORE BANKS WILL FAIL, b/c Ben Bernanke told me so;

Foreclosures for major sector of bank industry **topped 1 million*** (BOOM!!) in third quarter, report says

The report covers mortgages serviced by national banks and savings and loans -- about 34 million loans, or 65% of all outstanding U.S. mortgages. It showed that housing troubles *continued to rise* for the period from July 1 to Sept. 30, with the percentage of homeowners at least 60 days delinquent on their payments rising to 6.2%. That represented a 16.7% increase over the second quarter and a 73.8% increase from a year earlier, according to the report by the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

DON, when the "shadow" inventory of bank REO's (and the ones coming down the pipeline) hit the market ANY recovery we had is going out the window. The market will be hit hard with bank REO's for the next 12-24 months, minimum.

Remember what I said, no recovery until, at the earliest, last quarter of 2011. You heard it here first.

Dec. 21, 2009

Response to post #9:You have an excellent point. Another wave of foreclosures and short sales may well be coming. Don't expect Bernanke to take cognizance of it. But as the Fed keeps interest rates at zero, and so do other central banks, some indicators, such as stock and commodity prices, should rise, just from all that liquidity. Best, Don Bauder

Dec. 21, 2009

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