Bank Foreclosed Properties in 4 States Pushed 9 Banks Down

Bank foreclosed properties in the states of California, Texas, Illinois and Arizona contributed largely to the collapse of nine banks owned by holding company FBOP Corporation, bringing the total number of failed U.S. banks as of the end of October to 115 banks.

The nine banking subsidiaries of FBOP that failed are Bank USA in Phoenix, San Diego National Bank, California National Bank in Los Angeles, Pacific National Bank in San Francisco, Community Bank in Lemont, Park National Bank in Chicago, North Houston Bank, Citizens National Bank in Teague, Texas and Madisonville Bank in Texas.

All these nine banks, which held $19.4 billion in total assets and $15.4 billion in total deposits, had been taken over by Minneapolis-based U.S. Bancorp. Their offices, which total 153, will open as branches of U.S. Bank.

The deposits of customers will be covered by the Federal Deposit Insurance Corporation up to $250,000. Bank customers can still access their money using checks, debit cards or ATMs and should continue making their home loan payments and other loans as usual.

According to FBOP, it suffered huge losses in two areas: preferred stocks in Fannie Mae and Freddie Mac and bank foreclosed properties in the commercial sector.

FBOP said that when the U.S. Treasury Department took over Freddie and Fannie, it wiped out the preferred stocks of these two companies, also wiping out the investments of banks and insurers.

FBOP also incurred huge losses because of its long-time involvement in commercial area estate lending. FBOP posted $708 million in loan losses last year, and by the middle of this year, FBOP fell below 98 percent of similar holding companies in ranking based on bank capital.

Last August, FBOP was given a chance by the FDIC to increase its capital, improve its risk management and cut down its focus on commercial property lending, but it ultimately failed. FDIC later signed a $14.4-billion loss-share agreement with FBOP acquirer U.S. Bank.

The biggest of the nine failed FBOP banking units was California National, considered the 101st largest bank in the U.S. It had $7.1 billion in total assets and had 66 branches in the Los Angeles metro area.

According to FDIC, the closure of the 9 banks will reduce FDIC funds by $2.5 billion. The 115 banks which failed largely due to bank foreclosed properties since January have pushed down the FDIC insurance fund to less than $10 billion from its $45 billion one year ago.

Related Posts:

• Commercial Bank Owned Foreclosures Rising
• Bank Foreclosed Homes in Las Vegas Grew as Corus Bank Closed
• Overbuilding Drives Commercial Foreclosures in Phoenix
• Commercial Property Investments Turn Sour
• Use TARP to Stop Foreclosures, Bair Says