Commonwealth Bank Shut, Assets Transferred by FDIC

State banking officials late Friday afternoon closed Commonwealth Bank of Torrance and named the Federal Deposit Insurance Corp. as receiver.

The assets of the failed institution, which state officials said had suffered “significant loan and operating losses” and was “operating in an unsafe manner” with a negative net worth of $146,000, were transferred by the FDIC to two healthy banks.

At a hearing Friday night in Los Angeles Superior Court, Judge Warren H. Deering approved the sale of Commonwealth Thrift & Loan--a healthy, 100%-owned subsidiary of Commonwealth Bank--to Republic Bank of Torrance for $4.56 million. John O’Donnell, president of Republic, said the thrift was “highly profitable” and had assets of “a little over $11 million” and $3.2 million in capital.

All other assets of Commonwealth Bank were transferred to Downey-based Capital Bank of California, which accepted a payment of $9.2 million from the FDIC as an inducement to make the acquisition. Unlike some bank failures in which the FDIC has retained a number of questionable loans, state Superintendent of Banks Howard Gould said Capital is acquiring all Commonwealth assets except the thrift subsidiary.

According to Gould, “the acquisition will allow depositors, borrowers and other customers of the failed bank to continue business with Capital Bank of California on Monday with no disruption of banking services.” Depositors of Commonwealth Thrift received similar assurances in court. The FDIC will insure deposits in the thrift beginning Monday.

Commonwealth Bank was founded in 1975 and at the time of its closure had about 7,900 deposit account customers with $78 million in deposits. It operated branches in Torrance, Carson, Cathedral City, San Diego and Santa Ana. Ironically, much of its growth in the early 1980s came from acquiring small failed banks.