A smaller group of savings and loans operating here saw a year of relative stability and even deposit gains after undergoing decimation in their ranks in 2008.
Deposits at the 10 largest savings and loans rose 4.3% for the 12 months through June from a year earlier to $2.3 billion, according to this week’s Business Journal list.
The list ranks thrifts operating here by local deposits as of June 30, based on data from the Federal Deposit Insurance Corp. The Business Journal has adjusted the data to reflect any acquisitions or other major changes at thrifts since June.
The group remains a shadow of its former shelf after a pair of big 2008 failures took away $11 billion in local thrift deposits.
Nearly all of that money moved to banks on our list of the largest commercial banks operating in the county (see centerfold insert).
In late 2008, New York’s JPMorgan Chase & Co. took over Seattle-based Washington Mutual Inc., which for years was the largest thrift operating in the county. Chase is No. 3 on our commercial banks list.
The other 2008 casualty was Newport Beach-based Downey Financial Corp., which once ranked No. 3 on our savings and loans list.
Downey’s deposits were seized by regulators in late 2008 and transferred to Minneapolis-based U.S. Bancorp, now No. 4 on our banks list.
Some of the turmoil that started in late 2008 spilled over to this year’s list with No. 1 OneWest Bank FSB, formerly Pasadena-based IndyMac Inc., which failed two years ago.
OneWest was born in early 2009 when a group of investors acquired IndyMac’s assets from the FDIC. In December, the reborn thrift boosted it branches and assets by acquiring struggling Los Angeles-based FirstFed Financial Corp.
But OneWest saw a big loss in Orange County deposits for the 12 months through June, likely the result of a run at IndyMac before its failure. Deposits fell 38% to $704 million.
The loss, easily the biggest among the 10 thrifts operating here, would’ve been worse if not for the First Federal acquisition. First Federal had about $65 million in local deposits a year ago and ranked No. 6 on last year’s savings and loan list.
But deposits only tell part of the story for OneWest. More conservative lending and the First Federal acquisition helped boost OneWest Bank’s core capital ratio to nearly 11% from 3.17% a year earlier. The ratio measures a cushion against losses at a bank or thrift.
OneWest had a profit of $398 million in the six months through June, versus a loss of $767 million a year earlier.
The thrift has 300 OC workers, unchanged from a year earlier.
The bulk of the list is made up of smaller thrifts, seven of which managed to grow deposits while five posted higher profits.
Without OneWest’s deposits decline added into the mix, the nine remaining thrifts on the list saw deposits surge 47% to $1.6 billion.
That’s notable given stepped up competition from banks, said Greg Presson, senior managing partner in Newport Beach at B. Riley & Co., a Los Angeles-based investment bank and market research company.
“Thrifts are struggling to hold on to their profit bases,” he said. “Community banks are aggressively expanding their footprint in Orange County.”
No. 2 Fullerton Community Bank saw a 17% gain to $555.2 million in deposits, bringing it within $150 million of OneWest.
But Fullerton Community saw a big drop in profits, going from $3.2 million a year earlier to $414,000.
Chief Executive Tom Meyer said the thrift sold off some small-business loans, losing interest payments on them.
“We had a little bit of loan runoff last year,” he said. “The Small Business Administration lending market reopened a bit last year. And we were able to sell some loans off from midyear through the end of the year.”
The thrift’s assets were up slightly to $752.7 million. Its core capital ratio was down slightly to 8.6%.
Fullerton Community didn’t do any acquiring. It did relocate one South County branch and remodeled others.
“So far, we’ve done well in the past 10 years by growing internally,” Meyer said. “It’s much easier for us to continue to focus on the way our culture works now than to try to add new business through acquisitions.”
No. 3 Rancho Santa Fe-based La Jolla Bank saw a 52% gain in deposits to $364 million at its pair of OC branches. La Jolla Bank’s profits rose 50% to $48.9 million for the six months through June. Its core capital ratio slipped a bit to 7.72% as of June.
No. 4 Little Falls, Minn.-based Home Savings of America saw a 133% rise to $264.4 million in deposits. The thrift’s core capital ratio was down nearly two percentage points from a year earlier to 5.3%.
But Home Savings broke into profitability. It saw $2.6 million in net income for the six months through June, versus a loss of $158,000 a year earlier.
No. 5 IronStone Bank, part of Raleigh, N.C.-based First Citizens BancShares Inc., saw a 56% jump to $156.5 million in local deposits.
Irvine-based First Foundation Bank was one of the few thrifts to move places on the list from last year, jumping from No. 9 to No. 6 with a 366% gain to $141 million in local deposits.
The unit of Irvine wealth manager Keller Financial Group opened in the fall of 2007 as mortgage markets were melting. It has been conservative with lending, starting out by requiring 35% down from borrowers.
“We didn’t have a lot of the legacy issues a lot of the other S&Ls and banks had at the time,” said Scott Kavanaugh, chief executive of the thrift. “We also started with a fair amount of capital, which is extremely important in an environment like this.”
No. 7 West Covina-based Universal Bank saw an 18% rise to $76.5 million in deposits at its Orange branch.
Consolidation continued to play out with No. 8 First Financial Bank in Costa Mesa, which saw a 20% drop in deposits to $39 million.
Manhattan Beach-based Beach Business Bank has taken over the Costa Mesa branch from Ohio’s First Financial, which itself took over the branch in 2009 with its takeover of failed Columbus, Ind.-based Irwin Union Bank & Trust Co.
The Costa Mesa branch is set to convert to Beach Business Bank this week, marking the end of its run as a savings and loan. Beach Business Bank is chartered as a commercial bank.
We opted to leave First Financial on this year’s savings and loan list since it was active as a thrift during the period covered by the list.
Next year, what’s now Beach Business Bank won’t appear on the savings and loan list. It’s unlikely Beach Business Bank will qualify for our list of the largest banks operating here, which this year has a cutoff of $200 million in local deposits.
No. 9 Plano, Texas-based Beal Bank moved up a notch from a year ago despite a 24.5% drop to $20.4 million in deposits.
Rounding out the list is No. 10 Share Plus Federal Bank, also of Plano, with $7.4 million in deposits, up almost 30% from a year earlier.
Share Plus moved up from No. 12 a year ago with the departure of First Federal and last year’s No. 11, Lee’s Summit, Mo.-based Metcalf Bank, which closed its Foothill Ranch branch.
Metcalf Bank, part of Missouri’s Central Bancompany, had acquired the branch in its takeover of the failed savings and loan of Foothill Ranch-based American Sterling Corp.
