Finance Globe

U.S. financial and economic topics from several finance writers.
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Nine Banks Fail on Friday

Nine more U.S. banks failed on Friday - all subsidiaries of one company, the FBOP Corporation. The banks were located mostly in the West: Arizona, California, Illinois, and Texas.

The FDIC entered into a purchase and assumption agreement with U.S. Bank, NA, of Minneapolis, Minnesota, a wholly-owned subsidiary of U.S. Bancorp, to assume all of the deposits and essentially all of the assets of nine failed banks. The nine banks were closed this evening by federal and state bank regulators, which appointed the FDIC as receiver.

The banks had combined assets of $19.4 billion and deposits of $15.4 billion as of September 30, according to the Federal Reserve. The nine banks had 153 offices, all of which were to reopen during their normal business hours on Saturday or Monday as branches of U.S. Bank of Minnesota.

The one bank taken over in Arizona was Bank USA, National Association in Phoenix, Arizona. The three California banks were California National Bank of Los Angeles, San Diego National Bank, and the Pacific National Bank of San Francisco. The two Illinois banks were Park National Bank, Chicago, Illinoisand the Community Bank of Lemont. Three Texas banks failed: North Houston Bank, Madisonville State Bank and Citizens National Bank in Teague.

The FDIC advises customers of these banks to continue their banking business as usual; customers may still write checks and use their ATM cards. And customers should continue to make their loan payments on time.

The FDIC estimates that the cost of the nine banks to the Deposit Insurance Fund (DIF) will be a combined $2.5 billion. U.S. Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. The DIF is not funded by taxpayer dollars, but rather by the insured financial institutions' FDIC premiums.

The failure of the nine banks brings the nation's total number this year to 115.

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Thursday, 30 November 2023

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