On Feb. 9, the Office of Thrift Supervision, a federal regulatory agency under the U.S. Department of Treasury, issued a corrective action directive against San Luis Trust Bank, which it said is “critically undercapitalized.”
The agency gave the bank until 5 p.m. on Feb. 15 to recapitalize through a merger with or acquisition by another financial institution. Following that, it requires the bank to stay adequately capitalized for four consecutive quarters.
Corrective action directives are issued when Federal Deposit Insurance Corp-insured institutions show declining capital ratios and pose a financial risk. Such an order is typically the final warning before a bank faces liquidation.
In November 2009, regulators issued a cease and desist order and required the bank to draft a capital restoration plan. The OTS rejected that plan in January of this year.
San Luis Trust CEO Bradley Lyon and Chief Financial Officer Sam Collins did not return calls for comment. Bank employees told New Times they’re not talking to reporters.
A spokesman for the Western Region of the OTS didn’t answer requests for comment.
According to the latest data from the FDIC, the bank reported approximately $309 million in assets in September 2010, down from $403 million in September 2009.
In August 2010, the OTS closed the Solvang-based Los Padres Bank, according to the FDIC.