Homefed Bank Seized In Largest Thrift Takeover

SAN DIEGO - San Diego-based HomeFed Bank, the nation's eighth-largest thrift, was seized yesterday by federal regulators, making it the largest savings and loan institution to fail in U.S. history.

HomeFed, whose capital had been dissipated by a two-year skein of loan losses caused mainly by bad real-estate and commercial loans in Western states, was taken over by officials of the Office of Thrift Supervision.

The institution's 206 branches were expected to reopen today; depositors' money will be insured up to $100,000.

None of HomeFed's 3,100 remaining employees will be laid off in the foreseeable future, said John Quinn, a spokesman for the Denver office of the Resolution Trust Corp., the federal agency charged with cleaning up the thrift mess.

The failure ends a long struggle to salvage the institution, which lost $1.05 billion during the last two years and had long been on the government's list of troubled thrifts. More than 40 percent of its holdings consist of troubled assets.

HomeFed was unable earlier this year to raise needed capital from private sources to remain solvent.

Federal regulators spent the past three months searching for buyers for HomeFed. But the sheer size and complexity of the thrift's loan portfolio apparently was an insurmountable obstacle to finding buyers.

With assets of $13.5 billion, HomeFed is by far the largest thrift ever taken over by the government. Ironically, the second- and third-largest failures were also San Diego-based institutions - Imperial Savings, with $9.68 billion in assets, in 1989; and Great American Bank, with $9.5 billion in 1990.