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New Owners Take Over at Failed Bank : Finance: Chino Valley moves into the Fullerton office of defunct Pioneer, just days after seizure by regulators.


FULLERTON — The main office of failed Pioneer Bank, a fixture in the center of Fullerton for 13 years, reopened Monday as a branch of fast-growing Chino Valley Bank.

Customers flowed into the quaint main office, with its wide lobby, open center and mezzanine level of executive offices, but few of the local residents queuing up before eight tellers took all their money out, said D. Linn Wiley, Chino Valley's president.

Wiley spent the day in the Fullerton office greeting some customers and calling others on the telephone.

State and federal regulators seized Pioneer on Friday night and sold $78.5 million in deposits, along with the main branch, to the Ontario bank for $1.3 million. Chino Valley did not acquire an additional $37 million in brokered deposits, which are large, high-interest accounts placed by out-of-state money brokers.

About $8 million in deposits were not covered by the Federal Deposit Insurance Corp., which insures deposits up to $100,000 for each account holder. But the agency immediately made half the uninsured amount available to depositors and said it will repay what it can later from the sale of bank loans and other assets.

Chino Valley has 30 days to decide what loans it might want to buy, Wiley said. The bank expects to buy about $30 million worth of loans.

Wiley said the bank will determine Friday how many of Pioneer's 56 employees will have jobs with Chino Valley. Pioneer's branches in Orange and Santa Ana will not be reopened, regulators said.

Pioneer, long suffering from bad real estate deals, had lost $13 million in the last 30 months. Its capital, the final reserve against losses, had dropped to $2 million, and its last hope for a buyer evaporated in the last two weeks, said Thomas R. Timmons, Pioneer's president.

Timmons was brought in 16 months ago to try to help the bank recover from continuing losses on real estate loans made primarily on strip shopping centers in the Inland Empire, mostly from Rancho Cucamonga through Corona to Lake Elsinore.

Timmons said the bank had been talking with two separate investor groups when news reports near the end of June revealed that regulators had ordered the bank to raise its capital by the end of the month. Customers withdrew $5 million in deposits on June 29, causing a crisis in the bank's liquidity--its ability to have enough cash on hand to repay depositors.

At the same time, Timmons said, appraisals on troubled real estate came in much lower than expected, and the bank had to write down the value of those loans by $2.3 million.

"We thought things in the Inland Empire had bottomed out, but the values just continue to decline," he said. "We worked hard. We just didn't quite get it done. But the regulators hung in there with us as long as they could on the sale."

Pioneer is the first Orange County bank to fail this year and the 45th financial institution to collapse in the county since 1980.

Chino Valley, meantime, continues to grow. With Pioneer and other acquisitions this year, it expects to have $800 million in loans and other assets and 19 branches in four counties. Last year, it bought the failed Mid City Bank in Brea and ended the year with $687 million in assets.

"We're interested in the northern portion of Orange County," Wiley said. "It complements our existing market area and branch network."

Chino Valley has never lost money and has increased earnings in each of its 20 years except 1991, when profits slipped. It earned $9.9 million last year.

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