Feb 19, 2011 9:56 PM by Courtney Meznarich (DL)

San Luis Trust to reopen as First California Bank on Tuesday

Federal regulators have taken over yet another failed bank but this time it hits close to home.

On February 9, the Office of Thrift Supervision, or OTS, told San Luis Trust Bank it was, "critically undercapitalized."

The OTS gave the single-branch bank until February 15 to increase its capital through a merger or acquisition, or risk being shut down. The bank did not meet its deadline and on Friday night, regulators took over.

Although their money is safe, customers we spoke with say they are worried about something else. Losing a local bank, with local employees.

Dan Melton has been banking with San Luis Trust since it opened its first and only branch in San Luis Obispo in 1999. When he heard the bank was full of FDIC employees Friday night, and not the staff he has come to know, he was concerned.

"Decision making and policies will be dictated by some other entity than what's behind me," said Melton.

Melton says he built his small business with loans from San Luis Trust and he is worried that money will not be there to help him in the future.

"Before yesterday I could go in and talk to the bank here and they could say 'yes or no' to those type of questions," said Melton on Saturday. "Now they're going to have to say, 'hey I'll get back with you.'"

On Tuesday the bank will reopen as First California Bank of Westlake. The FDIC says it will be business as usual.

"They can still write their checks, use their ATM cards, debit cards, you know basically the only thing that's changed is the name," said Barbara Brunson, an ambudsman for the FDIC.

Melton can only hope that is the case as San Luis Trust becomes the latest local casualty of the struggling economy.

"I am entertaining conversations with other local bankers," he said. "Banking, like any other business in the current economic times, they've taken a gnarly hit. I'm sorry for the people that are going to lose their jobs here."

The FDIC says some San Luist Trust employees will be able to keep their job but not all of them. This is the second local bank to be shut down by regulators. Los Padres Bank, based in Solvang, was taken over last August.


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