Jul. 21--First Citizens Bank of Raleigh is taking over 11 bank branches in Southern California as part of a deal brokered by the Federal Deposit Insurance Corp.

The struggling Temecula Valley Bank of Temecula, Calif., was shut down Friday by regulators for having inadequate capital, and the FDIC was named as receiver. The FDIC accepted a bid from First Citizens to purchase virtually all the assets and assume the majority of the liabilities of the 11-branch bank. Terms of the deal were not disclosed.

"Not every financial institution has the ability to acquire a bank in this way," First Citizens spokeswoman Barbara Thompson said. "It is because of our stability, strength and capital levels that we were able to do this."

As the recession, housing slump and credit crunch hurt lenders, 57 federally insured banks have failed this year, creating a buying opportunities for healthy banks.

Tony Plath, a finance professor at UNC-Charlotte, speculated that First Citizens got a sweetheart deal because not many banks are in a position to buy an institution the size of Temecula Valley. That makes it a buyer's market.

Plath expects First Citizens to snap up other banks. "They're just getting started," he said.

Loans and real estate owned by Temecula Valley and purchased by First Citizens are covered by an agreement between the FDIC and First Citizens, which provides the bank with protection against losses.

"They got all the bad loans off the books," Plath said.

The FDIC has estimated that the takeover of Temecula Valley will cost its Deposit Insurance Fund $391 million, which it determined was the "least costly" way to resolve the bank's financial situation. Those losses stem primarily from loans to real estate developers, said FDIC spokesman David Barr.

First Citizen said it is assuming Temecula Valley's deposits and that no depositors would suffer any losses.

"We welcome customers of Temecula Valley Bank to the First Citizens family and assure them that their deposits are safe, sound and readily accessible," Chairman and CEO Frank Holding Jr. said in a prepared statement.

First Citizens' corporate parent, First Citizens BancShares, has a presence in Southern California, where its IronStone Bank has branches in a half-dozen cities.

But First Citizens Bank, rather than IronStone, made the acquisition because it is the corporate parent's largest subsidiary "and had the capital necessary to make the purchase," Thompson said.

"We believe that this bank is a great complement to our California franchise," she said. "Some of these markets we had looked at for expansion. This opportunity presented itself, and we are excited to be there."

First Citizens has an option to assume any Temecula Valley Bank leases on its banking offices or purchase buildings owned by the bank. First Citizens is committed to keeping the branches open for at least a year.

"Since we just went in Friday night, we're still evaluating the operation," Thompson said.

First Citizens BancShares has $17.2 billion in assets. First Citizens Bank has 354 branches in six states, including the 11 Temecula Valley branches. IronStone has 56 offices in 12 states.

david.ranii@newsobserver.com or 919-829-4877

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