Security Pacific Bank is shut down by FDIC
Crippled by loans to Inland Empire developers and home builders, Security Pacific Bank of West Los Angeles was shut down Friday by regulators, who said L.A.-based Pacific Western Bank would take over its four branches.
Depositors of the failed bank will have their $450 million in accounts transferred to 60-branch Pacific Western, which also is buying some of Security Pacific’s loans, the California Department of Financial Institutions and the Federal Deposit Insurance Corp. said.
Most of the loans will be taken over by the FDIC, which will seek to sell them.
The net cost to the federal deposit insurance fund from the failure is estimated at $210 million, FDIC spokesman David Barr said.
Regulators on Friday also shut down Houston’s Franklin Bank. Franklin ran up losses on builder loans as well as adjustable-rate home loans, including some in California, Arizona and Florida, Barr said.
Franklin and Security Pacific were the 18th and 19th federally insured banks to fail his year. There were only three bank failures last year after a stretch without any from June 2004 to February 2007.
Security Pacific is unrelated to the L.A. bank acquired in 1992 by Bank of America Corp.
Pacific Western’s parent, PacWest Bancorp of San Diego, had been scouting acquisitions since receiving a $100-million investment in September from a private equity group.
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