Orange County Leads State in Bank and S&L; Failures

Orange County is the state’s leader in bank and savings and loan failures, with federal and state regulators taking control of 22 institutions here since 1982.

The reason that the county’s failure rate is so high, according to regulators, consultants and industry insiders, is that its booming real estate market drew dozens of speculators into the financial institutions arena. The first move was into banking, in the late 1970s. Speculators moved into the S&L; business after state and federal deregulation in 1982 made it easier for thrifts to directly invest in real estate.

Bank failures in the county began in 1982--shortly after the real estate boom of the ‘70s went flat. S&Ls; picked up the pace in 1986.

William J. Crawford, California’s blunt-spoken S&L; commissioner, offered a simple explanation for the large number of financial institution failures in Orange County.

“There’s a lot of affluent people in Orange County. Affluent people get charters. Affluent people invest in real estate. Crooks like to get close to money,” he said.

“Where would you go? Would you go to South Central Los Angeles to get people to invest in your project? You wouldn’t. If you want to get money, you need to locate in Beverly Hills . . . or Orange County.”

Year by year, the county’s roll call of institutions taken over by regulators follows:

1982--Western National Bank, Santa Ana.

1983--Newport Harbour National Bank, Newport Beach.

1984--Heritage Bank, Anaheim; Bank of Irvine; Garden Grove Community Bank.

1985--South Coast Bank, Costa Mesa; Capistrano National Bank, Santa Ana; Butterfield S&L;, Santa Ana; Beverly Hills S&L;, Mission Viejo.

1986--Valencia Bank, Santa Ana; American Diversified Savings Bank, Costa Mesa; Saddleback National Bank, Laguna Hills; Consolidated Savings Bank, Irvine; Ramona S&L;, Orange; Orange Coast Thrift & Loan, Los Alamitos.

1987--North America S&L;, Santa Ana; South Bay S&L;, Newport Beach; Perpetual Savings Bank, Santa Ana; New City Bank, Orange; Equitable S&L;, Irvine; Pacific Savings Bank, Costa Mesa; First California Savings Bank, Orange.