Temecula Valley Bancorp to Seek Bankruptcy Protection

Temecula Valley Bancorp plans to enter Chapter 7 bankruptcy on Aug. 18 following the seizure and sale of its assets this month by regulators from the Federal Deposit Insurance Corp., according to a July 31 regulatory filing.

Citing inadequate capital levels, regulators on July 17 seized the bank’s $1.5 billion in assets and transferred ownership to First Citizens Bank and Trust, which reopened Temecula Valley Bank’s 11 offices July 20 under the new ownership of First Citizens Bank. The North Carolina bank has $17.2 billion in assets.

Temecula Valley Bancorp has ceased all business activity and operations. A federal bankruptcy judge will appoint a bankruptcy trustee responsible for liquidating the company.

The bank was operating under a cease and desist order from the FDIC and state regulators since February after sustaining heavy losses on its loan portfolio, mostly due to increasing defaults on land development and construction loans.

The bank had been seeking new investors and had lined up a potential group led by Bancroft Capital of Manhattan Beach to invest as much as $210 million. But the deal fell apart this month, leaving the bank with few options.

First Citizens, which owns Ironstone Bank and its three offices in the county, acquired Temecula Valley’s assets in a loss-sharing agreement and $1.3 billion in deposits, except for $304 million in brokered deposits. The FDIC estimated that the transaction will cost its insurance fund $391 million. TVB is the nation’s 57th bank failure this year, according to an FDIC news release.