U.S. Bank of Minneapolis, MN, is taking over the troubled operations of the banking subsidiaries of FBOP Corp. of Oak Park, IL. U.S. Bank has assumed all of the deposits and essentially all of the assets of nine failed banks with combined assets of $19.4 billion and 153 branches. The nine banks were closed last week by federal and state bank regulators, which appointed the Federal Deposit Insurance Corp. (FDIC) as receiver.

The nine banks involved in transaction and their approximate assets as of June 30 are:

• California National Bank, Los Angeles, CA, $7.1 billion;


• Park National Bank, Chicago, IL, $4.8 billion;


• San Diego National Bank, San Diego, CA, $3.4 billion;


• Pacific National Bank, San Francisco, CA, $2.1 billion;


• North Houston Bank, Houston, TX, $315 million;


• Madisonville State Bank, Madisonville, TX, $230 million;


• Bank USA, NA, Phoenix, AZ, $185 million;


• Citizens National Bank, Teague, TX, $106 million; and


• Community Bank of Lemont, Lemont, IL, $82 million.

The nine banks involved in this transaction will continue to operate under their current names and will be re-branded as U.S. Bank branches in the near future.

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. U.S. Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector.

"This transaction is consistent with the growth strategy that we have outlined many times in the past, which includes enhancing our existing franchise through low-risk, in-market acquisitions," noted Rick Hartnack, vice chairman of consumer banking for U.S. Bancorp, parent of U.S. Bank. "This transaction adds scale to our current California, Illinois and Arizona footprints and key markets within these states."

As of June 30, FBOP banks reported holding about $275 million in nonperforming commercial income producing properties including apartment properties.

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Cascade Bancorp Taking Steps To Raise Necessitated Capital

Cascade Bancorp, parent company of Bank of the Cascades in Bend, OR, entered into a written agreement with the Federal Reserve Bank of San Francisco and the Director of the State of Oregon's Department of Consumer and Business Services to maintain the financial soundness of its bank.

Under terms of the agreement, Cascade Bancorp has 60 days to submit a plan to maintain sufficient capital.

To fulfill that plan, Cascade Bancorp entered into a securities purchase agreement with David F. Bolger for $25 million of shares of common stock. Bolger currently holds 21.44% of the bank holding company's outstanding common stock. In addition, the company entered into another securities purchase agreement with an affiliate of Lightyear Fund II LP for the purchase of $40 million of shares of common stock. The company has granted Bolger and Lightyear preemptive rights on any subsequent offerings.

For the quarter ended Sept. 30, Cascade lost $12.6 million mainly due to a $22 million provision for loan losses with net loan charge-offs of $31.3 million (pre-tax) primarily due to declining real estate appraised values.

Bank of the Cascades entered into a cease and desist order this summer with the FDIC and the Oregon Division of Finance and Corporate Securities. Under the cease and desist, the bank agreed to improve its capital position, maintain liquidity ratios, reduce its level of non-performing assets, and reduce its loan concentrations in certain portfolios, improve management practices and to assure that its allowance for loan losses is maintained at an appropriate level.

As of June 30, Bank of the Cascades reported assets of $2.4 billion and nonperforming loans and foreclosed real estate of $217 million, of which about 20% was related to multifamily or commercial income producing properties.

Bank of the Cascades operates in Oregon and Idaho through 32 branches.

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Chicago Fed Comes Down on First Banking Center

First Banking Center Inc. and its subsidiary bank with $1 billion in assets, First Banking Center in Burlington, WI, entered into a written agreement with the Federal Reserve Bank of Chicago and the State of Wisconsin Department of Financial Institutions. Under terms of the agreement, First Banking Center has 60 days to come up with a written plan to strengthen board oversight of the management and operations of the bank.

Other actions required by the agreement call for:

• The hiring a chief credit risk officer,


• A plan to strengthen internal review and grading of the bank's loan portfolio,


• Not extend or renew any credit to or for the benefit of any borrower that has caused the bank a loss or charge off,


• A plan to deal with past due and real estate owned assets, and


• A plan to maintain sufficient capital.

As of June 30, First Banking Center, the bank, reported problem loans and foreclosed assets of slightly more than $60 million of which $19.6 million was tied to multifamily and commercial income producing properties.

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Download this story and all of the stories in the Watch List Newsletter here. The Adobe pdf version also includes all of this week’s leads of distressed properties and loans of concern, lease cancellations applied for in bankruptcy proceedings, all of the local and national facility closures & layoffs, and lists of loans approaching their maturity date. Plus the pdf version contains bonus news items not found in these columns or the CoStar Group web news pages.

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