FBOP Shuttered, as U.S. Bancorp Swoops in

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.