9 U.S. banks seized by regulators

by Ishita Sood - October 31, 2009 - 0 comments

<strong>Los Angeles, October 31 --</strong> U.S. Bancorp has acquired nine banks held by the FBOP Corp., seizing $18.4 billion assets in a move to pull the banks through the ongoing financial crisis.

Regulators detained 9 U.S. banks in a move to bail out the economy caught in the ongoing financial crisis

Los Angeles, October 31 -- U.S. Bancorp has acquired nine banks held by the FBOP Corp., seizing $18.4 billion assets in a move to pull the banks through the ongoing financial crisis.

The nine banks that are part of the acquisition are BankUSA; California National Bank; Citizens National Bank; Madisonville State Bank; North Houston Bank; Pacific National Bank; Park National Bank; San Diego National Bank; and Community Bank of Lemont.

Los Angeles-based California National Bank was taken over by regulators Friday, in what the Los Angeles Times termed as the fourth largest U.S. bank failure this year. Worried employees lined up to enter California National's head office where they had their employers' fate explained to them, regulators said.

"We're getting ready to turn everything over to U.S. Bank," said Roberta Valdez, a spokeswoman for the Federal Deposit Insurance Corp. (FDIC) which helped supervise the transfer of FBOP's assets.

"They will continue to operate as normal in the interim," she added, referring to lenders acquired from FBOP.

Bank failures 115 this year
The failure of the banks takes the number of “failed banks of 2009” to 115. FDIC estimates the cost of this failure to be $2.5 billion. They will cost a $2.5 billion deposit insurance fund to the FDIC. The rush in failures has washed-out the agency’s reserves, thus making it mandatory that banks prepay three years of premiums to raise $45 billion.

The winner takes it all
“U.S. Bancorp has clearly distinguished itself as one of the “winners” to emerge from the cycle -- managing to stay profitable in each quarter, repay TARP and add to its normalized earnings per-share power through small fill-in bank and non-bank acquisitions,” John McDonald, an analyst at Sanford C. Bernstein & Co., said to investors.

U.S. Bancorp Chief Executive Officer Richard Davis is adding branches, acquiring deposits, and seeking to gain share in the mortgage market.

“This transaction is consistent with the growth strategy that we have outlined many times in the past,” Rick Hartnack, vice chairman of consumer banking for U.S. Bancorp, said in a statement. “We also view this type of acquisition as an efficient means of leveraging U.S. Bank’s strong capital base.”

U.S. Bancorp picked up 153 branches with combined assets of $18.4 billion and deposits of $15.4 billion as of Sept. 30, according to the FDIC.

Last edited by Harpreet Bhagrath on Sat, 10/31/2009 - 10:36 | Write to author: Ishita Sood |