Canyon National Bank, Palm Springs, CA, was closed today by the Office of the Comptroller of the Currency, which appointed the FDIC as receiver. The FDIC entered into a purchase and assumption agreement with Pacific Premier Bank, Costa Mesa, CA, to assume all deposits of failed Canyon National.
All three branches of Canyon will be reopen on Saturday as branches of Pacific Premier. Depositors will have full access to their funds and will automatically become depositors of Pacific Premier.
Canyon National had total assets of $210.9 million and total deposits of $205.3 million at December 31, 2010.
Canyon Bancorp is the holding company for Canyon National Bank and the stock has decline from the $30 range in 2007 to $.66 cents at today’s close. The stock is now virtually worthless with little hope of recovery for shareholders.
The Office of the Comptroller of the Currency (OCC) had designated Canyon National to be in “troubled condition” under an agreement signed by the Bank in September 2008. In December 2010, the OCC informed Canyon National that their plan to raise additional capital was “not credible”.
Pacific Premier agreed to purchase all assets of failed Canyon National Bank without entering into a loss-share transaction with the FDIC. Typically, the FDIC offers loss protection on a failed bank’s assets in order to attract bids by potential buyers. The lack of a loss share agreement may indicate heightened aggressiveness in bidding for failed banks based on a perception of recovery in real estate values by the acquiring banks.
Pacific Premier is a state chartered commercial bank founded in 1983 with approximately $800 million in assets. The holding company for Pacific Premier is Pacific Premier Bancorp, Inc., trading on the NASDAQ. Pacific reported a profit of $4.2 million for 2010 compared to a loss of $460,000 in 2009. The Bank has seen a gradual increase in its share price since 2009.
The cost to the FDIC deposit insurance fund for the failure of Canyon National Bank is estimated at $10.0 million. Canyon is the nation’s 18th banking failure and the first in California.