RTT News ~ Three More Banks Fail; U.S. Bancorp. Buys Downey Financial, PFF Bank & Trust From FDIC 11/24/2008 12:42 AM ET

(RTTNews) - In what could be a sign of deepening financial crisis, three more banks collapsed on Friday. The Office of Thrift Supervision or OTS closed two California-based thrifts - Downey Savings and Loan Association of Newport Beach and PFF Bank & Trust of Pomona. In a third move, Community Bank, Loganville, Georgia was closed by the Georgia Department of Banking and Finance. The Federal Deposit Insurance Corp. or FDIC was named receiver for all the three closed banks.

Meanwhile, U.S. Bancorp. (USB: News ) revealed Friday that its unit lead bank, U.S. Bank National Association, has acquired the banking operations of Downey Financial and PFF Bank & Trust from the FDIC. All deposit accounts of Community Bank, Loganville, Georgia have been transferred to Bank of Essex, Tappahannock, Virginia.

FDIC, created in 1934, insures accounts up to $100,000 at its member banks. The subprime crisis, which began in the suburbs of California and Florida, and the resultant financial turmoil have forced FDIC’s intervention into the operations of many banks in the recent past. While no banks went bust in 2005 or 2006, seven had collapsed last year. As of September, 12 banks, having total assets of $42 billion, failed.

In a statement, OTS said Downey had total assets of $12.8 billion and retail deposits of $9.7 billion as of September 30, 2008. The bank, which had concentrated on non-traditional mortgages like payment-option and adjustable-rate mortgages, had been incurring losses since last year.

Downey, established in 1957 as a state-chartered savings and loan, was converted in 1995 to an OTS-chartered federal savings bank. It had 175 branches and about 2,200 employees. PFF had a large concentration of housing construction loans that were hurt by the deteriorating real estate market on the West Coast. It had mounting losses since last year and had no reasonable prospect of becoming adequately capitalized. PFF had $3.7 billion in assets and $2.4 billion in retail deposits as of September 30, 2008.