California National Bank expected to be seized tonight
The bank, a unit of FBOP Corp., is expected to be acquired by the U.S. Bank unit of Minneapolis-based U.S. Bancorp, with no losses to be incurred by depositors, the sources said. The branches would reopen as usual Saturday or Monday as U.S. Bank branches.
Seven other banks owned by FBOP, a privately held Oak Park, Ill., company, are also expected to be seized by regulators and acquired by U.S. Bank. They include San Diego National Bank, with 28 offices, and San Francisco’s Pacific National Bank, which has 17.
FBOP's owner, billionaire Michael Kelly, didn't return a call seeking comment today.
California National, with $7.1 billion in assets and $5.6 billion in deposits as of June 30, is the fourth-largest commercial bank based in Los Angeles County. Only City National Corp., East West Bancorp and Cathay General Bancorp are larger.
The collapse of FBOP's banks would be the latest in a rash of financial failures that began last year with government takeovers of 25 banks. Before today, 106 banks had failed this year.California National has had its share of lending problems. As of June 30, the last time it reported its financial results publicly, the bank had five times as much foreclosed property on its books and twice as many non-current loans as it had a year earlier. But the bank's main problem was its loss of about $500 million on heavy investments in Fannie Mae and Freddie Mac preferred shares, securities that were rendered nearly worthless by the government takeover of the giant mortgage firms last year.
U.S. Bancorp has been buying the remains of a number of failed banks. It acquired the remains of Downey Savings of Newport Beach and PFF Bank & Trust of Pomona when those struggling thrifts failed last November. Just this month, it bought 20 Nevada branches from BB&T Corp., which had acquired them as part of its deal to buy Colonial BancGroup Inc. At $25 billion in assets, Montgomery, Ala.-based Colonial was the largest bank to fail this year.
-- E. Scott Reckard