What Happened At La Jolla Bank?
“Fraudulent activity was recently discovered” at La Jolla Bank, FDIC spokesman Greg Hernandez tells City News Service in a story today.
On Friday, the Office of Thrift Supervision shut the bank down and noted “deficient corporate oversight by the Board and management.”
Frank R. Warren established the bank in 1985. He remained chairman of La Jolla Bancorp, the parent holding company, which was controlled by Warren family trusts. The bank’s president and chief executive was Rick F. Hall.
La Jolla Bank grew incredibly fast in recent years. Assets (loans) had doubled in three years, rising from $1.6 billion in 2004 to $3.3 billion in 2007. This growth was concentrated in commercial and residential construction, land developing, and multi-family and commercial real estate lending, according to federal regulators.
The bank’s fall was even faster. Non-performing assets (90 days past due) increased from $71 million at year-end 2008, to $777 million at year-end 2009.
The Rancho Santa Fe-based bank had 124 employees, nine branches in Southern California and one in Dallas, Texas.
The bank was closed on Feb. 19 and deposits were transferred to OneWest Bank of Pasadena (formerly IndyMac). OneWorld investors include J. Christopher Flowers, George Soros and John Paulson.
I worked at La Jolla Bank years ago. The founder was the such a kind man. One of the kindest men I’ve ever met. I will always look up to him as he was such a great, inspirational person. The person at fault in La Jolla Bank’s failure was the man appointed to CEO, Rick F Hall. This man was trusted but he took down the company for compensation. He was approving loans in the millions that didn’t meet the minimum requirements and were obviously too much for borrowers to pay off. Rick Hall did this for his own personal financial gain as he earned thousands in commission for every loan approved based on the dollar amount approved. The FBI was involved and investigated only to find that Rick Hall was the reason this bank failed and these multi million dollar loans were approved by Rick while borrows obviously were unable to pay back the loans. It’s very sad that this man, Mr. Hall was able to take down such a great thing. The Founder spent his life trying to build this bank and it was taken down by a crook, Rick Hall. I still miss working there as it was one of my favorite places to work.