Temecula Valley Bank, Temecula, California, was closed by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First-Citizens Bank and Trust Company, Raleigh, North Carolina, to assume all of the deposits of Temecula Valley Bank, excluding those from brokers.
Temecula Valley Bank’s eleven offices will reopen on Monday as branches of First-Citizens Bank and Trust Company. Depositors of Temecula Valley Bank will automatically become depositors of First-Citizens Bank and Trust Company. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until First-Citizens Bank and Trust Company can fully integrate the deposit records of Temecula Valley Bank.
Over the weekend, depositors of Temecula Valley Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.
As of 31 May 2009, Temecula Valley Bank had total assets of USD 1.5 billion and total deposits of approximately USD 1.3 billion. In addition to assuming all of the deposits of the failed bank, First-Citizens Bank and Trust Company agreed to purchase essentially all of the assets.
First-Citizens Bank and Trust Company will purchase all deposits, except about USD 304 million in brokered deposits, held by Temecula Valley Bank. The FDIC will pay the brokers directly for the amount of their funds. Customers who placed money with brokers should contact them directly for more information about the status of their deposits.
The FDIC and First-Citizens Bank and Trust Company entered into a loss-share transaction on approximately USD 1.3 billion of Temecula Valley Bank’s assets. First-Citizens Bank and Trust Company will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be USD 391 million. First-Citizens Bank and Trust Company’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to alternatives. Temecula Valley Bank is the 57thth FDIC-insured institution to fail in the nation this year, and the eighth in California. The last FDIC-insured institution to be closed in the state was Vineyard Bank, National Association, Rancho Cucamonga.
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