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Rise And Fall Of Heritage Bank

December 16, 1987

Aug. 20, 1975: Heritage Bank opens for business in downtown Anaheim.

December, 1980: Heritage becomes largest independent bank in Orange County with year-end assets in excess of $200 million.

Mid-1982: Heritage assets hit $280 million, but an audit by federal regulators begins and results in a year-end loss of $2 million for the bank as auditors order it to write down the value of numerous real estate loans.

May, 1983: Federal Deposit Insurance Corp. orders Heritage Chairman Douglas Patty's ouster from the bank, alleging mismanagement. Two other directors also are removed. Patty claims regulators are harassing him for his outspoken criticisms.

August, 1983: FDIC orders Heritage to raise $17 million in new capital or face closure.

December, 1983: Securities and Exchange Commission launches investigation of alleged securities law violations by several Heritage insiders.

March 1, 1984: Trading in Heritage Bancorp stock is suspended by the bank, pending an unspecific announcement that never materializes.

March 16, 1984: State banking department declares Heritage insolvent and names FDIC as receiver.

March 15, 1985: FDIC files $54-million negligence suit against 24 defendants, including 19 former officers and directors of Heritage Bank, claiming their mismanagement caused the bank's collapse.

March 19, 1985: FDIC announces that no qualified buyer has been found to assume Heritage's assets and decides to liquidate the bank--the first liquidation in California in 60 years.

June 17, 1985: Patty files $54-million suit in federal court against FDIC.

June 29, 1985: FDIC amends its Superior Court suit to add fraud charges against most defendants, increase its demand for damages to $154 million and add attorney malpractice allegations against three law firms that had advised Heritage officials during the years the bank operated.

March 11, 1986: SEC files suit against four former directors and a former president of Heritage Bank, alleging they manipulated the bank's stock in 1981 and 1982 while concealing from investors its shaky financial status. All but one of the defendants sign a consent decree in which they do not admit to wrongdoing but promise not to do such things in the future.

Dec. 14, 1987: Proposed agreement to settle the $154-million suit for about $10 million is announced.

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