The parent company of a locally-based bank that has branches in Temecula, Lake Elsinore and Fallbrook on Monday announced "the successful completion" of the sale of $7 million in new common stock.

The sale satisfies an agreement that Mission Oaks Bancorp, Inc. reached in May with federal regulators to boost its capital reserves.

"Nearly every community bank in Southern California is under some form of regulatory agreement, and many of them call for additional capital to be raised," Gary Votapka, president and chief executive, said in a press release. "We are one of the few companies that have successfully done that."

Votapka and Robert Knogge, chairman of the Mission Oaks board, both noted the difficulties that banks throughout the region have faced over the past two years. About 60 U.S. banks have failed during this period, and the local lending landscape is littered with casualties.

"The last few years have been very difficult for community banks, especially for those in the Inland Empire," Votapka said.

Knogge echoed that perspective.

"The Inland Empire was probably hit the hardest, in terms of economic damage, of all of Southern California," he said. "Our customers have been hurt and to the extent we serve those customers, we are affected, too. It’s been a tough period to endure."

The most prominent local bank to come under the control of the Federal Deposit Insurance Corp. was Temecula Valley Bank. That home-grown bank – which expanded rapidly and opened branches in Temecula, Fallbrook, Rancho Bernardo and other communities – was taken over by First Citizens Bank in July 2009.

Several other banks throughout the region have also changed hands or been taken over. In September 2008, Washington Mutual Inc. became the largest bank failure in American financial history. It was sold to JP Morgan Chase.

In January 2009, Redlands-based 1st Centennial Bank, which had a Temecula branch, was acquired by First California Bank of Westlake Village. Seven months later, BBVA Compass acquired the Temecula and Murrieta branches of Guarantee Bank.

In the release, Mission Oaks said the stock sale allows the bank to "significantly exceed" the capital ratios set by its primary regulator, the Office of Comptroller of the Currency.

The shares were sold for $4 per unit. Each unit included four shares of common stock and a warrant that entitles the investor to purchase Advertisement

Primus Golf Academy an additional share for $1 a share in 2013.

Votapka said the bank’s ability to raise the full amount it was seeking underscores its broad support throughout the region it serves.

"It is gratifying to know that the directors, shareholders and new investors who purchased our stock are confident that we will be able to continue to play a role as one of the dominant independent banks in our market," he said.

In a Tuesday e-mail interview, Votapka noted that 75 percent of the new shares were purchased by existing shareholders.

"So to a large degree, the new shares that were issued were kept within existing ownership of the company," he wrote in the e-mail.

He said Mission Oaks went with a "private placement" versus a public offering to existing shareholders, in part, because it could be done faster and at a lower cost.

"The cost to get this done was approximately $65,000 for the private placement versus probably three times that amount and a time frame that would have taken many more months to accomplish under a public offering," he wrote.

He added that the ability to raise capital in a public offering is "extremely difficult" amid the current economic conditions.

"We’re pleased that it was fully successful," Votapka wrote. "With the fresh capital, we will finish healing sooner and get back to the business of banking sooner."

He said the bank, which primarily loans to businesses, continues to loan money to qualified borrowers.

"We are looking for local businesses to support," he wrote. "However, it is pretty tough finding people who want to borrow for good reasons and that have good underwriting profiles."

He cited two examples of recent loans that have aided local businesses.

The bank loaned money to an industrial supply company to refinance a mortgage on its building. That loan allowed the company to lower its interest rate and improve its cash flow. Another loan allowed a maid service company to purchase its own building.

"They got a great buy on a piece of property that I don’t believe three years ago they could have afforded," he wrote in his e-mail. "With (a) low purchase price and low interest rates, they got themselves into what should be a great long-term investment."