Nine banks controlled by Illinois private holding company FBOP Corp. failed last Friday and were taken over by U.S. Bancorp in deals brokered by the U.S. Federal Deposit Insurance Corp. (FDIC).
So far in 2009, 115 banks have failed—the most in recent history. The nine failures are expected to cost the FDIC approximately $2.5 billion in insurance funds, the agency said.
Recent bank failures have also sent the FDIC’s coffers to a deficit in September. Recently the agency proposed to require member banks to prepay three years of insurance premiums to raise cash.
The nine banks are located in California, Arizona, Illinois, and Texas and had combined assets of $19.4 billion and deposits of $15.4 billion, the FDIC said.
Minneapolis-based U.S. Bancorp agreed to buy the banks in a FDIC brokered sale, and all 153 branches of the failed nine banks will begin operations as U.S. Bank beginning on Monday. Customer accounts are considered to be safe.
“The FDIC and U.S. Bank entered into a loss-share transaction on approximately $14.4 billion of the combined purchased assets of $18.2 billion,” the agency said in a statement. “U.S. Bank will share in the losses on the asset pools covered under the loss-share agreement.”
U.S. Bank has been on a growth binge during the recent recession by snapping up smaller regional and local banks. In June, the company repaid all of its $6.6 billion in TARP loans from the federal government, and last month it bought Nevada Bank to add to its operations. Its takeover of nine banks this week will also give it additional market share in California and Arizona.
"This transaction adds scale to our current California, Illinois and Arizona footprints and key markets within these states,” Rick Hartnack, vice chairman of consumer banking for U.S. Bancorp, said in a statement.