Houston Thrift Fails

Regulators have closed Franklin Bank, a $5.1 billion Houston thrift that became overextended to home builders and will likely result in a $1.4 billion loss to the Federal Deposit Insurance Corp. Prosperity Bank, El Campo, Tex., assumed all the deposits and $850 million of the assets. A pioneer in mortgage-backed securities, Lewis Ranieri, was a major investor and director in the failed bank that posted a $383.3 million loss for the third quarter. The bank's Call Report shows the bank took $121.8 million in charge-offs during the first nine months of this year and it had $359.2 million in non-accrual land and construction loans that it does not expect to collect. Franklin Bank had $1.3 billion in Federal Home Loan Bank advances. Regulators also seized Security Pacific Bank, a $561 million bank, which is the 19th bank to fail this year.