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Paradise Lost in Wake of FDIC Lawsuit

June 02, 1991|JAMES S. GRANELLI | TIMES STAFF WRITER

* Ferguson and his team worked so hard and so well that the eventual liquidation of the institution allowed regulators the rare luxury of paying off all valid depositors and creditors in full with $6.7 million left over.

Rebuilt an Institution

* Regulators continued to work well with Ferguson after he became president and chief executive of California City Bank in Orange in March, 1986. He was instrumental in waking up the lethargic institution and making it attractive enough to be bought last year by CommerceBank in Newport Beach.

* In contrast to Ferguson's plight, regulators approved Gene Hobday, Valencia's president and second-largest shareholder, as president of the Bank of Anaheim when it opened in October, 1984. While at Valencia, Hobday implemented an aggressive growth plan that led to much of the bank's troubles, and he quit a month after the FDIC imposed its first operating order on Valencia. Hobday's clearance for the Anaheim bank came before the agency filed its lawsuit against him and other directors and officers, including Ferguson, in February, 1987.

"We always considered Harvey to be top drawer. The work he did is what lined the pockets of the FDIC," said lawyer Findley.

Ferguson, who has handled just about every job in his 36 years in the industry, receives effusive praise from all quarters for his work at Valencia and California City.

"Harvey did everything that could be done to have the bank survive, but he was dealing with an impossible situation," said former Orange County Superior Court Judge Bruce Sumner. Sumner supervised the payout of $8.5 million to 62 pension and profit-sharing plans that lost money when their Valencia trust accounts were allegedly mismanaged by trust department executives and consultants.

Robert Hoyt, who was California City's vice chairman, said Ferguson is "an excellent administrator and banker."

Strong in Operations

"His long suit is operations--being a frugal administrator and getting along with people," Hoyt said. "Those are real important things. The whole world revolves around communications, and if you lack that, you've got problems. Harvey provided that asset for us."

Luckily for Ferguson, a good job was waiting for him when he returned to Orange County. Clyde Gossert, chairman of CommerceBank, wanted him to run the bank's branch operations. When his bank bought California City, Gossert didn't want Ferguson to leave for Paradise.

"I found him to be very straightforward, very honest," Gossert said. "I have a lot of respect for what he did with California City. He turned it around."

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