FBOP Shuttered, as U.S. Bancorp Swoops in

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Time finally ran out on FBOP. The FDIC on Friday seized the $18.2 billion banking company, whose nine subsidiary banks will be absorbed by U.S. Bancorp (USB).

The nine shuttered banks are Bank USA of Phoenix; California National Bank of Los Angeles; San Diego National Bank of San Diego; Pacific National Bank of San Francisco; Park National Bank of Chicago; Community Bank of Lemont, Ill.; North Houston Bank of Houston; Madisonville State Bank of Madisonville, Texas; and Citizens National Bank of Teague, Texas.

The banks had combined assets of $19.4 billion. Under its so-called loss-sharing arrangement with U.S Bancorp, the FDIC will pay $2.5 billion from its deposit insurance fund to cover the cost of closing FBOP. The closures bring the total number of bank failures to 115, the most since the Savings & Loan industry blew up in the 1980s and early ’90s. Some experts predict that more than a 1,000 banks will collapse as a result of the financial crisis.

FBOP, a closely held company owned by real estate mogul Michael Kelly, suffered large losses on real estate loans and on investments in Fannie Mae and Freddie Mac.

Alain Sherter is an award-winning business journalist who has written for The Deal and Thomson Financial Media.

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